Administrative responsibilities can tax any company, but for smaller businesses in particular managing human resources can be a heavy burden. When you run a small company with limited time and resources, the last thing you want to do is divert your attention from the core business that's your bread and butter. Outsourcing human resources functions can reduce your administrative workload and free up your time so you can focus on your business objectives.

If you haven't given serious thought to outsourcing, the range of tasks that can be offloaded might surprise you. An HR outsourcing company can manage a whole range of human resources functions that you might otherwise outsource to multiple providers - these functions include everything from payroll processing and benefit plan management and administration to recruiting, training and more. With one provider to take responsibility for a range of HR functions, you'll not only spend less time on administration, but less time managing vendor relationships as well.

However, it's important to find an outsourcing company that will work with you to provide services that are easy to use and accessible for your employees. Adam Cavalier, president of California-based insurance broker Cavalier Associates, notes that "There's a buzz about outsourcing, but the real value is only realized when employees internally are bought into the service and able to use these resources as they are meant to be used."

Since managing human resources efficiently and intelligently is critical to your company's success, it's vital to find a service provider who can offer the right mix of services. Whether you want a bundled package or you prefer to pick and choose the services you need, we've reviewed the options available to you. The marketplace is crowded with companies to choose from, but we've researched some of the best providers for the small-to-medium sized customer. We'll give you the pros, cons and bottom line on some of the best-known names in the industry, and with this information you'll be prepared to make the optimal decision for you company.

Small Business HR Outsourcing Trends in 2018

We started to see some new trends in HR outsourcing toward the end of 2017 and beginning of 2018. Some of these trends have deeper roots, however, such as the still-increasing tendency to move toward the cloud. Cloud computing is nothing new, but it is becoming even more prevalent when it comes to things like outsourcing because it is a convenient way to share work and communicate when employees are spread out in different locations. Cloud computing also offers a quick way for you to access information and check in with outsourced employees.

Some businesses are also starting to look toward social media as a means of recruiting talent, even when that talent is outsourced. Social media allows businesses to reach potential employees no matter where they live. It can be a highly effective recruitment tool when you're searching for HR employees who aren't necessarily local to your business.

Finally, some companies are contemplating "selective outsourcing," which means outsourcing part of their HR needs, but not all. This creates a balance between the benefits of HR outsourcing and the challenges (such as time zone differences and communication difficulties).

A Word on Pricing

For most small business owners, price is going to play an important role in deciding on which HR outsourcing company to choose. However, HR outsourcing services are highly customized based on the needs of the client. It's important to note that outsourcing costs can vary anywhere from $45 to $1,500 per month based on the number of employees and the particular services required. Charges range from 4% to 8% of each employee's pretax monthly salary, which means that the total cost will vary considerably based on size. In some cases, services can be outsourced for a flat monthly fee as well.

According to Lisa Fleming, PR Manager at Paychex, "The cost for fully outsourced HR services varies greatly and is typically customized based on the individual needs of the client. Generally, however, when combining comprehensive service and technology solutions for on-site HR support, payroll, and retirement benefits, the price can be as low as $680 per bi-weekly pay period for 10 employees, far less than hiring a full-time HR person for your small business."

Best HR Outsourcing for Small Businesses Overall

Paychex Flex offers the full range of services for HR outsourcing, including payroll, taxes, benefits, recruiting and training; and they do so without requiring a long-term contract. More uniquely, Paychex also offers an on-site assistance program that puts HR professionals in the office when customers need more help. While many outsourcers offer services like employee handbooks and guidelines, they're often nothing more than boilerplate. Paychex will create a robust set of guidelines customized to meet the needs of each client. Their website also offers significant educational resources on a wide range of HR topics. One downside, however, is that Paychex doesn't offer a live chat function, so clients still have to depend on telephone options. They also offer special programs for businesses with fewer than 50 employees, making them a standout provider for small companies.

 

Best HR Outsourcing for Very Small Businesses

Oasis Outsourcing offers every service we could ask for, and does so without requiring a long-term contract. For the very small companies, they are well equipped to handle the entire HR process. The company will work with customers to develop strategy and strengthen areas where there are weaknesses. They offer convenient online account management and mobile options that make it easy for customers to stay on top of HR administration, and they can also help with training, performance reviews and other employee management issues. In addition to great online educational resources, they also offer a health care reform center to keep users abreast of important changes. The only negative we found is the lack of a live chat feature.

Best HR Outsourcing for Customers Who Want a Customized Offering

Insperity offers nearly all the features we could ask for, and will even conduct background checks and drug testing during the recruitment process. They offer assistance in all areas of human resources administration, including recruitment, payroll, benefit administration, regulatory compliance, and risk management. The company is particularly well suited to the small business owner that wants to pick and choose among services, and doesn't require clients to purchase bundled services. Employees can easily access pay and benefit information from Insperity's website, while a mobile app allows them to view their information on the go. The mobile app also makes it possible to track time, attendance, paid time off and vacation accruals. Customer support is generally good, and the company has added a live chat option as well as a helpful blog on HR topics. Although the company declined to provide pricing information, their model is based on a percentage of employee salary and total cost is a function of the number of employees and specific services chosen.

Best HR Outsourcing for Industry Specific Solutions

TriNet offers the comprehensive range of services you would expect from an HR outsourcing firm, but stands out by organizing its services along industry lines. For customers in healthcare, financial services, retail, manufacturing, non-profit or other industries that may have special needs in setting up benefits and administrative functions, TriNet offers specific industry knowledge. They offer strong reporting capabilities, and can connect to QuickBooks as well as employer HR dashboards. The live chat function is highly regarded, although online reviews have reported difficulties with customer service and transparency.

Our Methodology

To find the human resources outsourcing solutions for small businesses, we began by talking to business owners themselves, as well as some of the professionals who advise them. We asked them who their outsourcing provider is, what services they choose to outsource, what informed their choice of provider, what they love about outsourcing, and what they wish they could change. We discovered, not surprisingly, that error free processing is a key issue. Business owners also value customer service (particularly live chat options), online functionality, and the ability to pick and choose the activities they choose to outsource.

We also did extensive research online, reading hundreds of consumer reviews and complaints, and poring through numerous review web sites. Then we narrowed down our list of PEOs to the most commonly mentioned names.

With the short list of 10 companies in hand, we scrutinized each company's website to compare and contrast the options offered. We watched their tutorial videos and reviewed the customer resources offered by each.

Based on our research, we developed these criteria, which we used to evaluate each outsourcing company.

  • Ease of use
  • On-site assitance
  • À la carte service offerings
  • Long-term contract required
  • Customer service
  • Live chat
  • Online support materials
  • Pricing transparency
  • Flexibility of terms
  • Mobile app

Here are the remaining companies we looked at during our research.

ADP Total Source is a behemoth in the payroll processing industry, and the best choice for companies with more than 500 employees. They offer the full range of outsourcing capabilities, including standout performance management features. Their services span the full employee life cycle, and they are one of the few outsourcing companies to conduct first round interviews. They're generally praised for their customer service.

CPEhr offers a comprehensive range of services, and allows customers to pick and choose rather than subscribing to a bundled plan. They offer a wealth of online educational resources and one-on-one consultations with HR specialists. Although they've had some weak reviews for online support and mobile functionality, they're a good choice for companies that want individual attention from an HR specialist.

Accenture HR is also a full-service provider with a comprehensive range of services, but poor customer service is catching up with them. They've recently dropped out of the top 10 outsourcers as ranked on Toptenreviews.com due to customer service issues.

AonHewitt offers most of the services companies require from an outsourcer, with the exceptions of recruitment, job postings and job descriptions. Their performance management options are considered to be outstanding, but overall the company really is targeted toward the largest corporate clients. They currently do not offer a mobile app, and the website is thin on educational resources.

Checkpoint HR is a popular choice among mid-sized companies, with customers expressing high levels of satisfaction. They offer an extensive range of services, including full lifecycle recruiting, and customers express appreciation for their integration of payroll, benefits and administration.

XcelHR offers assistance with payroll, benefits, risk management and administration for companies of all sizes. Their mobile app is well regarded, and can be used with iOS and Android devices. Support options are weak though, with no live chat or FAQs. See our review of XcelHR for more information.

This article was updated February 2, 2018.

 

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