Small businesses need to run a tight ship. Every dollar spent and every hour of work counts. For a small business to have enough time and money available to focus on its core goals, it must efficiently handle its routine, but vital, administrative tasks.
Human resources functions are part of the backbone of a company, but they can be costly and take up substantial amounts of your personnel's time. For these reasons, many small businesses outsource some of their HR functions to administrative services organizations (ASOs).
ASOs can generally handle HR tasks more efficiently than their small business client companies could do on their own. ASOs can help many client companies because they:
By working with an ASO, a small company gains access to technology that helps administer payroll and other HR functions efficiently, without having to buy, maintain or update it themselves. The software may provide features like employee self-service portals, which are popular with employees and can save administrative staff time by empowering employees.
Small companies often lack expertise in HR compliance requirements, leaving themselves at potential risk of noncompliance and being vulnerable to mistakes or missing a deadline. ASOs provide best practice guidance to help companies navigate HR compliance.
In this comprehensive guide on administrative services organization best practices, we'll show how you can achieve optimization of your HR functions by outsourcing them to an ASO. We'll also review the stages of a small business’s relationship with an ASO, including:
An administrative services organization (ASO) works with companies, often small businesses, that want to outsource HR functions. An ASO combines advanced HR outsourcing technology with best practice guidance from experts HR professionals, giving you the best of both worlds.
Unlike professional employer organizations (PEOs), ASOs and their clients are not in a co-employment relationship. When you work with an ASO, your payroll taxes are filed under your own employer ID number and you remain the employer of record.
ASOs typically offer options for the types of HR functions they'll administer and levels of service they'll provide. The following are the key services that you can expect when you outsource to an ASO:
To get the best HR administration, it helps to be aware of best practices for optimizing the working relationship between a small business and its ASO. These best practices apply at the outset, when you choose the best fit ASO for your needs, and as you implement ASO services, leverage ASO-provided technology to increase HR efficiency, monitor performance, adjust strategies as needed, and manage your HR data.
ASOs are not all the same, and it probably will take considerable time and effort to find one that will be a great fit for your company’s needs. Carefully vet prospective ASO providers. The services your ASO offers should match your HR outsourcing needs, along with offering flexibility for you to fine-tune and update your choices.
Start by evaluating your current HR processes and challenges. What are the specific HR tasks you do now that could be better handled by outsourcing?
Also, keep an eye on the future — look for an ASO that could continue to work with you as your business grows. Will your relationship have sustainability? If so, you will avoid the work of finding a new ASO and enjoy the advantage of continuing with a provider that already knows your company.
These are the important factors to consider when selecting an ASO:
After you choose an ASO, the next step is to achieve a smooth transition of the outsourced functions. Work together with the ASO to integrate your workflows. Best practices for the transition and integration are to:
When you work with an administrative services organization, you will receive access to advanced HR management software. This technology will help streamline your HR tasks and make your HR processes run more efficiently. These are some of the basic services an ASO typically provides for a small business:
It’s very important that the new HR technology can integrate with other existing business systems that you may use, such as accounting and retirement systems. Work closely with the ASO to help with a smooth integration, so that the system and HR software are working together.
Once the new system is operating, don’t leave its effectiveness to chance. Instead, systematically measure and track its performance. Useful metrics include employee turnover rate, employee satisfaction, absenteeism rate, and the length of time it takes to hire a new employee. To help figure out your return on investment (ROI), calculate the amount of money you are saving by working with your ASO, and divide that by the cost of the ASO. To help evaluate the amount saved, consider the functions you would have to handle in-house if you weren’t using an ASO. Include the salaries and benefits you would need to pay to employees to handle those functions and the cost of buying or leasing, maintaining, and troubleshooting in-house software. To help calculate the cost of the ASO, add the monthly or yearly fees and any additional fees, such as start-up costs.
HR records contain sensitive employee information, which may include Social Security numbers, banking information, and other information that employees want to keep private. If there’s a security breach, all of that could be released. Hackers could use the information for identity theft or sell it on the dark web. Even if the damage is contained, employee trust and morale will be damaged if their employer fails to properly safeguard their data from attack. For all these reasons, data security must be a top priority of HR management.
Many ASOs offer cloud-based data management [EP4] as well as expertise in data security[EP5] and processes. Your company’s role should be to implement reasonable security controls to protect company and employee data, regularly review the ASO’s legal terms and data privacy policies, communicate openly with the ASO, and provide training for your employees on best practices for data security.[EP6]
TriNet’s ASO service, HR Plus, is designed to help small businesses thrive. We provide an advanced cloud-based technology platform, HR Platform, and best practice guidance from teams of professional HR experts — all at an optimized cost compared to hiring an HR manager in-house.
When you sign up for HR Plus, you’ll be connected with both a TriNet implementation specialist and your new outsourced services team. After purchase, our team will reach out to you regarding the next steps to take.
To provide a great fit for your needs, we provide three levels of services to choose from alongside our powerful, cloud-based HR platform. Payroll processing, benefits administration, and other HR functions all run on a single platform, so that information from each is easily integrated with the others. Contact us today for a free demo!
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