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HR outsourcing: How to keep your HR staff from freaking out


You’ve decided that HR outsourcing can help your business grow, and you’re ready to hire a professional employer organization (PEO). But your in-house HR team isn’t thrilled.

Here’s what could be causing anxiety – and strategies to help you overcome it while building enthusiasm for the change.

What’s behind the resistance to HR outsourcing?

The following questions might be running through your HR manager’s mind:

  • Are they looking to reduce headcount?
  • How does this affect my job?
  • Am I going to be let go?
  • Do they think I can’t do my job?

It’s natural for them to feel that way at first. The prospect of handing off their job responsibilities to an HR provider can feel threatening, which may even spark fear.

But good, thoughtful conversations and guidance can help alleviate tension and anxiety. This is where your company’s leadership can prove invaluable, especially if they’re skilled at managing people through periods of change.

Change management

Change can prompt both rational and emotional responses. Addressing both types is important to help your HR manager or HR staff prepare for the new arrangement. The extra effort is worth it, since trying to dismiss their concerns can be interpreted as justification for their feelings of distrust and lead to performance issues.

Start to build buy-in by acknowledging their fears and emotions. Display compassion for their concerns. Help them understand:

  • Why you’re making a change
  • How you expect it to affect them
  • How you’re prepared to help them adjust

Paint your vision for the future. Describe what it will look like for the whole company and for everyone on your HR team as your company progresses with HR outsourcing.

Invite them to imagine the future, too, by saying something like, “Picture yourself doing more strategic work while you have a team of professionals on your side handling the daily tasks and advising you on more complex issues.”

With vision comes buy-in

Once you get buy-in on the long-term vision, talk about the journey and how you’ll work together to make that vision a reality.

Be confident and specific – your positive outlook and tone will help your workforce embrace the change with confidence and enthusiasm.

Give everyone multiple opportunities to ask questions about HR outsourcing, either in group conversations or one-on-one interactions with management. Focus on communication and transparency of the process – and ensure your HR staff that this move is happening to empower them, not to compete with or replace them.

At the same time, resist sugarcoating anything. That may come across as insincere or misleading. Acknowledge that the transition process may be clunky and uncomfortable at first, but that it is necessary to pave the way toward better, more efficient ways of doing things.

Remember: A reputable PEO should have a robust, comprehensive process to help take you and your team through the transition, making it as seamless as possible for the entire organization.

Why HR outsourcing is good for your HR personnel

Very likely, your human resources personnel didn’t go into HR for the paperwork. They’re probably well-educated with degrees or certifications – and an undeniable passion for helping your organization and your people succeed.

A PEO can walk alongside your existing HR department to allow it to go beyond the daily HR administrative tasks that often take up a great deal of time.

With the right PEO in place, tactical HR processes like payroll, benefit plan management, recruiting support and performance management are less cumbersome or removed from your plate entirely.

Once the PEO is in place, your HR team can spend more time on initiatives that support the business’s goals. They can be more strategic in their HR efforts, not just simply reacting to whatever paperwork comes down the pike. They’re freed up to focus on things like:

  • Leadership development
  • Succession planning
  • Company culture
  • Employee engagement
  • DEI
  • Training

Let’s say, for example, your HR manager now has the time to talk with other company leaders proactively about their concerns. Working either independently or collaboratively with the new PEO to undertake a climate survey, your HR manager identifies a trend of declining performance in a particular department. Now she can develop an action plan for that group to increase performance and engagement, which has the potential to make that department more valuable to the company.

Of course, greater employee engagement usually leads to increased retention. With more bandwidth to concentrate on strategic initiatives, your HR manager will be better positioned to help bring quantifiable results to the company.

Stronger with support

In addition to handling daily HR administrative tasks, a PEO can help your HR staff address complicated, messy issues that may crop up. A reputable PEO should have a team of professionals to help navigate the complexities of employment issues, such as:

  • Management of leaves of absence
  • Unemployment claims
  • Payroll taxes
  • Hiring and firing decisions
  • Workers’ compensation claims
  • Charges of discrimination filed with a state or EEOC
  • HR-related mandatory notices and reporting

A reputable PEO should offer features and services you may not be able to provide otherwise, and those services should adjust as your business needs evolve. This can help ensure that your HR team has the resources and support it needs to work more efficiently at any stage.

For example, if you only have five employees, you may not currently be able to offer a retirement savings plan. And if your business volume increases and you find yourself needing to double or triple your company’s workforce in the next couple of years? Having a 401(k) option available to your employees gives your HR staff another resource to attract and retain top talent.

If you choose a PEO with scalable offerings, they’ll be able to adapt as your needs change over time.

Everyone benefits with HR outsourcing

When a PEO enters the picture, more than just the HR staff will be affected.

The value will likely be felt throughout the entire workforce. If you’re fortunate enough to work with a premium HR provider, your employees should have access to a wider variety of benefits than you’d be able to offer on your own, such as a 401(k) plan, health care benefits, an employee assistance program and educational reimbursement.

Garner enthusiasm for the move to HR outsourcing by educating everyone company-wide about how working with a PEO will benefit them directly. When people understand what’s in it for them, they’re usually quicker to get on board with a new initiative or concept. Present the benefits in a way that’s relevant to your employees.

For instance, you might highlight the kinds of benefits that can improve your employees’ quality of life. Share useful facts like:

  • “You’ll have a variety of health insurance policies to choose from, instead of just one.”
  • “You’ll have the option to save for retirement with a competitive 401(k) plan.”

By emphasizing the positives, HR and non-HR staff alike will feel more optimistic and receptive to change.

Ready to outsource HR with a PEO?

If you’re considering a PEO, know that they aren’t all created equal. Make sure you’re getting the best PEO for your company’s needs, one that has a solution for where you are now – and where you want to grow.

Find out how to select the right PEO for your business. Download our free e-book, A buyer’s checklist: How to compare professional employer organizations.