January 18, 2021

What is a HRO?

What is a HRO?

The HRO acronym stands for Human Resources Organization (or Outsourcing). Just like it sounds, these organizations allow you to outsource much or all of your HR administration. Many times they also provide strategy and can be hands on with helping your business’s unique goals and challenges.

Just like you’d expect from an outsourced HR department, HROs can typically handle things like:

Outsourcing all or part of your HR administration to a HRO lets you, as the business owner, focus on running your business instead of managing HR tasks.

What are the advantages of using a HRO?

Get time back in your day
You didn’t start your business to spend your time running payroll, finding and managing benefits, or researching complex employment regulations. Using a HRO lets you focus on your business, while the HRO handles all of the “back office” work.

Outsource some or all of your HR administration
A HRO can work with you to identify where you need help with your HR processes—all the way from hiring new employees to terminations and retirement. A HRO is also a great way to extend your internal HR team so you don’t need to spend time hiring, training, and managing more employees. They’ll typically go further than just taking administrative busy work off your plate like running payroll. HROs can help you create custom HR processes, handbooks, consult with you about your growth goals, and help with tough employee situations.

Compliance and tax support
Tax laws and regulations are complex, change often, and typically are different per state. This includes things like overtime rules, tax forms that need to be generated, employee garnishments, taxable wages, and many, many other compliance and tax regulations that would require a full time commitment just to understand. HROs are experts at employment related compliance and have teams dedicated to keeping up to date with the laws and can make sure you’re staying compliant.

What are the disadvantages of using a HRO?

Less control over HR choices
The biggest disadvantage really is that you’re outsourcing most of your HR administration, which means you don’t have control over who they hire, their communication style, and the software they use. So if you are someone who likes to control every aspect of your business, this may cause some friction.

Lack of individual support
HROs are typically managing HR tasks for many businesses at the same time. This means they can’t be 100% dedicated to you and your employees and may even be limited by their own internal processes that are geared towards helping hundreds of other employees. This may cause friction as your business grows and you don’t have your own internal team dedicated to managing unique employee issues and complex scenarios specific to your business.

What are alternatives to using a HRO?

The three most popular options for outsourcing your HR administration are:

At the end of the day, all three options will keep you from spending your time Googling complex tax laws and regulations. If you want to outsource your HR so that you can focus on your business, you should look into all three to see what will work best for you and your business.

Disclaimer: Any articles written on this website, including this article, are not to be taken as legal or HR advice. Employment laws are constantly changing and vary by location and industry. You should consult a lawyer or HR expert for guidance. Need HR advice? We can help!

📸 Photo by Brooke Cagle on Unsplash

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