How to Choose an Outsourced HR Supplier

How to Choose an Outsourced HR Supplier

HR is rarely a priority for a business start-up. As an entrepreneur, the focus is getting your great idea off the ground and then building the company. While you may be a manageable two-man band today, your HR requirements will be small and occasional, but as you grow and recruit more people there will come a point when you need to bring in some more regular HR expertise to manage this growth effectively.

The administration associated with employing even just three or four people is increasingly burdensome, especially given the need to comply with more and more legal requirements. And as your ranks expand, the people-related policies and procedures that need to be in place increase proportionately. Pressure on cashflow in the early days means it is difficult for a start-up to afford full-time HR staff so the best option for many will be an outsourced HR solution. But with such an integral business function, and one that improves with the familiarity of working with you for a long period of time, the outsourced HR needs to be able to start small and grow with you as you realise your ambitions of becoming a major company, rather than being swapped out and replaced as you reach each milestone.

In order to choose the right HR supplier that can therefore grow with you, Sharon Crooks, HR Services Director, plusHR, highlights 10 key due diligence questions to ask all potential suppliers when looking for the right outsourcing partner for your business:

1. Can it flex to your business needs? Does the supplier have the capability to scale up its service as the HR demands of the business increase and is it prepared to reduce its offering if times get tough? In order for your business to have all of its HR needs met throughout its lifecycle, it is important to realise that as your workforce grows, this growth brings with it a variety of new HR areas that must be accommodated – therefore it is important for outsourcing suppliers to have sufficient breadth of services and the necessary resources to grow alongside you and work as an extension of your business.

2. What system does it use? A web-based approach will be the most flexible option for a start-up. How user-friendly are the user interfaces? Will it help to streamline HR tasks?? If taking a self-service HR route, what provision do they have for those employees that work in the field or who don’t have internet access?

3. How much will it cost? As well as the ongoing charge for its services, find out upfront whether there is an implementation fee. The monthly fee for some outsourcing arrangements can appear cheap but drilling down into the detail can reveal a high implementation fee and additional ‘extras’ which can be hidden within the initial costings.

4. Can it help with business planning? A good HR outsourcer will ask to see your business plan and assess not only what services you need today but project what you will need in the future as the business grows and how much it will cost you. It is key to remember that a good outsourcing partner will work as an extension of your business, and not as a lone arm.

5. What are the terms of the contract? Find out how long you will be tied in to the contract and when the break clauses are if things don’t work out.

6. How good is the outsourcer’s data security? You will be entrusting this company with your employee’s personal data so ask them where the data will reside and how secure it will be. What back-up and disaster recovery strategy does it have in place?

7. Will you have dedicated people working on your account? Find out who your employees will speak to when they have a query. Some organisations route these to a large call centre which can make for an impersonal experience for the employee.

8. Will the service be customised to your needs? Some outsourcing providers force you to follow their processes while others will be prepared to deliver a more tailored service.

9. Who are their other clients? Ask for at least two client references and if possible make site visits. Gaining direct feedback from other clients and appreciating their experiences is likely to aid the decision-making process.

10. Will the supplier fit with your culture? The culture of a media company will be very different from that of a financial services firm, so make sure any HR supplier will assign people who can fit in with the working style and values of your organisation

Partnering with the right HR outsourcing provider can bring enormous benefits to organisations. It enables them to keep control of the budget while enabling them to drive the business forward. The key to choosing an outsourcing partner is to find one who can fit with the business culture and work closely with you, as an extension of the team, at all stages of your business growth.
Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners and Deloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry. More information, click


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