ASO Best Practices: Your Comprehensive HR Guide

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:

• Gain the advantages of economies of scale.
• Have more financial resources to invest in advanced HR management software  that might otherwise be out of reach for many of their small business clients.
• Can provide teams of human HR professionals to help with HR functions and expert consulting.

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:

• Finding the best fit ASO provider.
• Transitioning to an ASO.
• Monitoring and fine-tuning its performance.
• Using its expertise as a catalyst for innovation and growth.

Understanding Administrative Services Organizations (ASOs)

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:

• Payroll administration. Payroll functions include assisting with calculating gross pay, net pay, payroll taxes, and other deductions and withholdings, issuing paychecks or direct deposits and pay stubs to employees, and keeping payroll records.
• Benefits administration. ASOs may assist with administering health, retirement, and other benefits. The client company retains responsibility for selecting and sponsoring benefit plans for its employees.
• Compliance support. ASOs use their HR expertise to help client companies navigate compliance so they can comply with payroll tax and other applicable rules and requirements.
• HR technology solutions. The advanced technology an ASO provides, often a human resources information system (HRIS), improves the efficiency and simplicity of payroll processing, time and scheduling, record-keeping, and other HR functions.
• Risk mitigation. Services in this area might include payroll tax compliance and audits to help uncover potential areas of concerns in HR and payroll.
• Strategic planning and consulting. ASOs may provide industry and workforce analytics, giving you insight into trends you can use to help with your business strategy.

Best Practices for Working With 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.

Choosing the best fit ASO

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:

• Reputation and experience. Check out reviews of ASOs you are considering. Talk to people in your professional network who have worked with ASOs. Find out if the ASOs have established track records, how long they have been in business, what credentials they have earned, and whether they have a reputation for reliability.
• Services offered and flexibility. Do the services offered match the services you want? Are different levels of services available? Could you add specific services without wasting revenue on services you don't need? Can the ASO adapt if your company expands?
• Cost-effectiveness. Find out the monthly or yearly fees of the ASOs under consideration, and add in any additional costs. Compare the total costs of outsourcing HR operations to the amount it would cost you to conduct the same HR operations in-house with your own staff and technology, without ASO assistance.
• Customer support and responsiveness. Does the ASO provide a contact person or team that you or your employees can reach for support? What hours are they available? How long does it take them to respond to questions?
• Open communication. You should be able to communicate easily with an ASO from the very start of your relationship. Look for an ASO that has people who are helpful and are available when you need them.
• Compatible leadership styles. As a leader in your organization, it would be to your advantage to have a counterpart in the ASO with a compatible leadership style so that you will feel comfortable and be productive working together.

Implementing ASO services effectively

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:

• Establish clear communication channels with ASO. It’s important that you work together with the ASO during this phase. For that, clear communication channels are crucial. You should have regular contact with the ASO to monitor progress and raise any issues that may arise. You may want to assign an individual or team within your company to have the primary responsibility for communicating with their ASO counterparts.
• Train staff on new processes. The better prepared your staff members are for change, the more effective the transition will be. Your staff should understand how all new processes will affect them. They should learn how to access the system and how to use its employee-facing features, including reviewing and updating their employee records.
• Set realistic goals and benchmarks. Track the progress of the transition using measurable, specific, and achievable goals and benchmarks.
• Get feedback from employees. After the new processes are running, gather feedback from employees through surveys, meetings, or one-on-one discussions. Your employees should be benefiting from your relationship with the ASO. If not, you may need to make internal adjustments or discuss problems with the ASO.
• Expertise and advisory services. The ASO can help process payroll efficiently with its technology. Depending on the level of service, check to see if they are helping you stay up to date on HR deadlines and employment-related rules and requirement. You may want to engage the ASO to provide audit services to help uncover potential HR operational or payroll tax concerns so that you can evaluate and navigate these concerns.

Leveraging technology for HR efficiency

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:

• Payroll processing. The software should save time and improve payroll processing efficiency. It may help calculate gross and net pay, deductions, and generate paychecks, pay stubs, Form W-2s, and it may remit and file payroll taxes.
• Employee self-service portals. The software should provide a user-friendly employee self-service portal that your workers can access at any time from any internet-connected device. Employees should be able to get information, update their employee records, and enroll in benefit plans.
• Performance management tools. ASO-provided HR software can help optimize performance management by creating review cycles. The tools should make the review process more efficient by allowing input via mobile devices, tracking employees’ progress toward identified goals, and providing support for peer reviews, self-reviews, and other forms of feedback.

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.

Monitoring performance and adjusting strategies

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.

• Regular reviews and feedback sessions. After the new system is set up, continue to monitor it. Keep an open line of communication with the ASO. On a regular basis, review the metrics, employee reactions, any issues that may have arisen, and any enhancements or fine-tuning you’d like to implement. Schedule periodic feedback sessions with the ASO so you can deal with issues as they arise, when it is easiest to make changes.
• Adjustments based on feedback and changing business needs. Your periodic reviews, meetings with the ASO, and feedback from employees and other stakeholders may indicate that you need to make some adjustments. Adjustments may also be necessary if your company upscales, downscales, or changes direction. Depending on changing needs, you might decide you want to outsource more, fewer, or different functions to the ASO. Work with your ASO to make changes to maximize the benefits of the relationship.
• Leverage consulting expertise for growth. One of the benefits of an ASO is the guidance available from its expert HR consultants. By availing yourself of their expertise, you can streamline your operations and boost productivity. Your employees and leadership team can apply their time and energy toward increasing your company’s growth and profitability.

Managing data

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] 

• ASO data protection capabilities. ASOs often have better resources and expertise than small businesses to safeguard data. Because ASOs work with many businesses, they can invest more than any individual client in advanced data security tools and processes.
• Compliance with GDPR, CCPA, and other data privacy regulations. ASOs can stay up to date on the tangle of data privacy regulations. These may include the General Data Protection Regulation (GDPR), which applies to companies that offer goods or services to individuals in  the European Union or that process their personal data; the California Consumer Privacy Act (CCPA), which applies to certain companies doing business in California; or any other privacy regulations that may apply to them. Experienced ASO guides understand the rules and work with clients to keep them on the right path.
• Using data for informed decision making. If your ASO provides data analytics reports, you will be able to unlock valuable analytics that you can use to make informed decisions. Your new powers for analysis can help you improve current and future workforce policies and processes to help increase employee engagement and attract and retain top new hires. Data that once seemed useful only in arcane HR applications can be a catalyst for company-wide innovation and growth.

Administrative Services Organization Best Practices

TriNet’s ASO service, HR Plus, is designed to help small businesses thrive. We provide an advanced cloud-based technology 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!