Top 5 Questions to Ask Before Outsourcing HR Functions

Discover the top 5 questions you must ask before outsourcing HR functions to ensure a successful partnership and maximize business potential.



When you're outsourcing your human resources, you quickly learn that not all outsourced HR options are the same; even professional employer organizations vary considerably in their offerings.

Boss Magazine recently addressed the problem and came up with several criteria to help you narrow down the list, such as breaking down how you’re billed, reviewing benefits packages, and learning company accreditations, among other things.

At Stratus HR, we compiled a list of additional questions to ensure you choose the right PEO for your company's HR.

Is Outsourcing HR Beneficial?

There are many beneficial reasons to outsource HR functions to a PEO.

Outsourcing HR functions can provide significant benefits to businesses of all sizes, large or small. Outsourcing Human Resources can help businesses with cost savings, improved benefits, streamlined hiring and onboarding processes, and access to specialized expertise.

Overall, by outsourcing HR functions, your business can focus on its core functions and improve its bottom line.

The Importance of Asking the Right Questions Before Outsourcing HR Functions

Outsourcing HR to a professional employer organization (PEO) is an excellent option for businesses like yours looking to streamline their HR processes and decrease administrative expenses.

However, before deciding to outsource HR functions, businesses should ask certain crucial questions to ensure that it is the perfect fit.

5 Questions to Ensure the Success of Your Outsourcing HR Functions

When deciding on a partner to hand off the entire HR function to, you should take into consideration the five following questions. 

1. How will collaboration and communication be managed when outsourcing HR functions?

 When you’re concerned about an issue, does the outsourcing provider have a representative assigned to each client? The answer should be yes!

Whichever PEO you choose to partner with should have a dedicated representative for your client account, and they should be an expert in the HR field. When you need an answer, digging through a site's help section or waiting on hold for the next available representative just doesn't work. 

Can you stop by and meet the PEO’s staff members? 

Our belief is that human resources are best tackled by humans who understand the community they serve. You can find out for certain by stopping in to meet the entire team who will be working on your account.

2. How will the outsourcing provider ensure data security and compliance? 

As a business owner, data security and compliance should be one of your top priorities. When deciding on an HR outsourcing provider, you should look into the provider's security and compliance initiatives.

HR outsourcing services providers typically ensure compliance and data security by implementing security protocols, conducting regular risk assessments, ensuring compliance with laws and regulations, conducting background checks, providing employee training, and using secure channels for communication.

It’s always best practice to ask about security and compliance measures, as it's better to be safe than sorry.  

3. What is the PEO’s own turnover like? 

It seems like a trick question because it turns the table on the PEO who will also be trying to keep YOUR turnover low. But you want to know that the people with your PEO aren't here today, gone tomorrow. 

You want to work with an HR organization that values its own staff as much as you value yours, and that practices what it preaches.

4. What kinds of technology does the PEO offer to your managers and employees? 

In today’s workforce, employees want instant access to data and the ability to run reports in a self-service world. Make sure they’re empowered with the technology offered by your PEO.

5. What can the PEO do immediately to help address your HR concerns? 

Ask specific questions about your HR issues to gain insight into how the PEO will service your account. Learn how the PEO plans to immediately step in and make your life as an employer easier.

By asking questions about the HR outsourcing company, you can gain clarity over whether or not the partner you’re interested in will be a good fit for your company and business objectives. Next, you’ll need to evaluate the potential of the providers that are a good fit. 

make sure you ask the right questions before hiring an hr outsourcing service provider

How Can You Evaluate Potential HR Outsourcing Providers?

To evaluate the potential of an HR outsourcing firm, you should do some research on the company’s reputation and experience in the industry, review their services and offerings to see if they align with your business needs, or test out their responsiveness and availability of support by sending them an email. 

Some other ways you can gather intel on potential HR outsourcing partners could be:

  • Reading recommendations and referrals  
  • Conducting online research and reading reviews on platforms like Google, Twitter, or Reddit
  • Requesting proposals from various providers and comparing your offerings

Making the Final Decision About Your Future Professional Employer Organization

Now that you’ve asked clarifying questions and conducted some independent research, it's time to make a final decision about your future PEO partner.

When making your decision, it's important to consider the PEO offerings and whether or not they meet your business objectives and needs. 

You can do this by: 

  • Revisiting your HR needs and objectives and considering whether the partner you’re leaning towards can help you achieve your goals and satisfy business needs. 

  • Comparing the benefits and drawbacks of each provider you’ve been looking into to get a well-rounded idea of their individual pros and cons. 

  • Finally, select the outsourcing partner that best aligns with your business goals and workplace culture.

Can Company Growth Increase by Outsourcing HR to a PEO?

A 2016 NAPEO study found that small businesses that use a PEO grow faster, have lower rates of employee turnover, and have higher rates of business survival than other comparable small businesses. Do your due diligence and you’ll find the right PEO fit for your company’s HR needs.

Overall, outsourcing HR services to a PEO can provide your business with significant benefits, but not all PEOs are the same, so it’s crucial to ask the right questions to find the right fit. 

Stratus HR is a full-service HR management PEO with over 20 years of industry experience. We help businesses return focus to their core functions and work on improving their bottom line for a fraction of the cost. We’re the PEO of choice among small and medium-sized businesses.  

If you're ready to start outsourcing HR administration, you can book a consultation with Stratus HR today to learn more about our services and how we can help your organization navigate payroll processing, employee benefits administration, HR compliance, and more! 

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