HR Outsourcing Options
With a number of acronyms flying around in the business world for outsourcing HR, what do they all mean? At Employers Logic we are less concerned in fitting a client into a given model and more concerned in creating desired outcomes that work best for the underlying client.
Business Process Outsourcing (BPO):
This is the catch-all term for any service an underlying business might go to market looking for a solution.
Accounting:
Many small to mid-size businesses turn to outside firms for the getting accurate numbers in running their business and may utilize them for the most often used HR outsourcing task, running payroll. Accounting firms and payroll specialists generally handle all the filings and details needed to provide accurate information to various federal and state agencies in regard to your employees. In the case of accounting firms, they are not generally going beyond providing checks and year-end W-2's.
Administrative Service Organization (ASO):
In this HR outsourcing model, the HR company takes over almost every aspect of having employees. The underlying company remains the employer of record with full managerial control but the ASO will provide and administer benefits, payroll, 401k, worker's compensation and all other details of an employee.
Profesional Employer Organization (PEO):
This model involves the underlying company and the HR firm going into a joint employer arrangement where there is shared liability for the employees. This model takes advantage of leverage in driving down costs by pooling large numbers employees together for reduced costs on medical benefits, worker's compensation, and 401k administration. Again, in this case, the employing business remains in full managerial control of the employee
Employer of Record Services (EORS):
The HR firm, in this case, is the employer for the underlying business. The advantages of this arrangement can be numerous but will generally involve higher costs per employee but also reduce risk to near zero! In an employer of record situation, the underlying business may have the ability to modify and customize benefits and employee perks but each change will be reflected in an add-on cost. This model can be advantageous to employee risk adverse companies that only want to focus on driving business expansion and growth while not having the liabilities of employees.
Third Party Administrator (TPA):
A third party administrator can do any number of tasks for an underlying company. Many businesses turn to TPA's for benefits management and to manage any contract employees or consultants who are not W-2 employees but rather are 1099's performing work under a contract.
If your growth and success have created any areas of concern in regards to HR compliance, administration or a need to evaluate, Employers Logic will gladly provide no obligation reviews to help craft plans for moving forward. Please reach out today...