What is an HRO?

What is an HRO?

An engineering tutor speaking to his students during a seminar in a bright, modern lab at a university.

Previously we’ve written about ASOs and PEOs, but there’s a third model that treads the line between those two called an HRO. HROs, or human resources outsourcing companies, offer small to mid-sized businesses a different route to satisfy their HR needs. But what makes them stand apart from a PEO or ASO? 

HROs offer a high degree of flexibility for businesses to take care of their specific human resources needs. Typically, businesses looking to outsource their HR functions look to ASOs or PEOs first. But oftentimes, you’ll find companies blend their offerings; for example, ADDA serves as an ASO, HRO, or both depending on the needs of each client. 

Human resources play a prominent role in the sustainability and success of your business. So let’s make sure that function winds up with the right experts for your specific needs. In this blog, we’ll explain what to expect from an HRO and how they compare to and sometimes complement ASOs and PEOs. 


Smiling investor with male and female HRO consultants at desk in office


What does an HRO do? 

HROs are highly service-oriented third-party providers of HR functions. They do just about everything, but the beauty of this model lies in the flexibility offered to businesses. Human Resources Outsourcing companies provide your business with as much or as little HR assistance as you need. But, of course, determining those needs can require collaboration between you and the service provider. 

Services typically provided by HROs include payroll, benefits administration, policy creation, employee engagement tasks like learning and development, and more. When you work with ADDA, for example, you can outsource all of your HR work, using us like your HR department, or you can pick specific tasks like payroll administration. 

Of course, each HRO will offer its own variety of HR services depending on its particular expertise, so it’s essential to align your needs with the provider you find. Some other standard services you’ll see from an HRO include:

  • Payroll tax services
  • Management of the benefits enrollment process
  • Employee engagement initiatives
  • Educating employees on benefits offerings
  • Ongoing labor and employment legal compliance updates
  • Workplace safety 
  • HR documentation
  • Data-driven HR strategy 

Outsourcing HR is about more than just the services offered. You need tech-savvy consultants who do the work to blend into, and in some cases improve, your company’s culture. If your HRO is handling employee relations tasks, you need a consultant who your employees can trust. 

Good HROs employ knowledgeable consultants who genuinely care about people and processes. If you’re going to outsource your crucial HR work, those are the kind of people you want to work with. 



How does that compare to an ASO or PEO? 

When you work with a PEO, you get full-service coverage for all of your HR needs in one tidy package. However, you also have to enter a co-employment relationship with that provider, which comes with some complications. First, you relinquish some control over your employees and what you offer them regarding benefits packages. This can save you money but also prove to be limiting. 

Additionally, it can be very tricky to leave a PEO once you’re ready to move HR in-house because of the leverage the co-employment relationship gives them with employee data. If those factors sound like an issue for you, PEOs probably aren’t a great fit. On the other hand, though, PEOs do provide excellent services across HR, benefits, and more. The cost of those services also adds some appeal for smaller businesses. 

ASOs purely focus on your administrative HR work. Are you tired of working through mountains of HR paperwork? Have there been a few too many close calls getting your checks out on time? ASOs can definitely help you out. These providers offer expert HR administrative services to businesses looking to offload those troublesome tasks.

Some might offer more guidance than actual service, so make sure you know what you’re getting. For example, ADDA will run payroll, administer benefits, and perform other administrative tasks. Moreover, if you care about maintaining control over your people and processes, ASOs will suit you nicely. 


What kind of business typically works with an HRO? 

It depends on what you’re looking for. Medium to large businesses with internal HR staff work with HROs to give their employees more time to focus on strategic work, for example. Small companies might work with an HRO like ADDA when they want a full-service HR option without the legal rigamarole tied to working with PEOs. To boil it down further, work with an HRO if you need HR expertise. 

HROs can offer payroll, benefits administration, compliance and policy guidance, talent acquisition and management, and even employee relations. Does your business need help with any or all of those functions? You might be in the market for an HRO. 

Additionally, these service providers can deliver powerful cost-saving results. For example, on the employee relations front, the consultants enter conflict resolution scenarios without the biases and baggage of those who work every day with that employee. This leads to more effective decision-making. 

Your hiring and onboarding can speed up, saving you money on recruiting and handing you employees who are ready to produce in their roles faster. You’ll also have access to cutting-edge documentation and compliance expertise, protecting your business from legal issues. Another benefit to your business, of which there are many, would be the time you save on HR. HROs deliver better HR results, and they free up your time to focus on the work your care about. 

For a small-to-mid-sized business, that’s a game-changing upgrade. So long story short, businesses that want those kinds of results typically work with HROs. 


ADDA is your HR sweet spot

What works for one business may not work for another. You need HR solutions catered to your needs, and ADDA understands that. Between our ASO and HRO models, you’ll have access to full-service HR options or targeted consulting for specialized projects. Either way, you reap the benefits of HR expertise in your business. So what are your HR needs? Schedule a call here to discuss. 


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