Ask SmallBiz: Picking an HR Company

Q.   I’m planning to outsource my company’s payroll and other human resource needs. What should I look for when choosing an HR company?

A.  With so many providers entering this field, you need to choose wisely. Here is what ProService suggests you consider when choosing an HR provider:

1. How long has the company been providing true HR administration services in Hawaii?

In Hawaii, it’s important to know the local business market, because state regulations are notorious. Find out how long your provider has been a bona fide HR expert here and how much of its staff is dedicated to the HR administration side of its business.

2. How long has the company been with its healthcare carrier?

Some firms will broker rates through a number of carriers, jump from carrier to carrier, or quote unsustainable healthcare rates just to win business. To avoid painful surprises at renewal time, you should ask them to demonstrate historical and forecasted healthcare rate data, and show clearly how they will manage your healthcare rates for the long term.

3. How many clients does it serve?

Size matters. The size of an HR firm directly correlates to long-term pricing leverage, tenure of staff and range of businesses with which it has worked. New firms will often promise equal service at lower rates but may not have staying power.

4. What is the ratio of internal service staff to client employees? 

A top-notch HR administration firm will have no more than 120 client employees per internal service staff member. This 120:1 ratio should not include sales staff, administrators, senior management and staff working on other business lines.

5. What are the qualifications and tenure of its service staff? 

The HR administration firm should be willing to disclose staff credentials and tenure to prove they are qualified to manage the many potential technical escalations of HR for you. A misstep can be disruptive or disastrous to your company. You want people who are certified as a Professional in Human Resources (PHR) or qualified by the Society for Human Resource Management (SHRM), certified payroll specialists and other skilled HR professionals.

6. Is the company ESAC accredited?

ESAC, the national Employer Services Assurance Corp., provides the highest level of accreditation in the outsourced-HR-administration industry (similar to the FDIC for the banking industry), requiring a rigorous verification of financial, operational and ethical performance. ESAC accreditation provides clients with up to $6 million in surety bond coverage as financial assurance. Fewer than 30 firms nationwide have this honor.

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