OneSource Business Solutions Blog

How HR Outsourcing Impacts Performance Management


Tracking your employees' performance is vital to a successful and thriving business. You don't want to be overbearing, but you need to make sure your performance management program helps your employees reach your company's goals. 

Many companies find their performance management system and process may not be well-defined. This creates confusion and frustration among employees, as they do not have a structured environment to help them thrive and succeed.   

Better defining performance management can give your employees the structure they crave while ensuring their focus remains on your core business needs. Restructuring and defining your performance management system can be time-consuming. Outsourcing some of your HR needs to a trusted partner can ease the burden on your existing HR team, giving them the time to establish proper performance management protocol. 

What is performance management? 

Performance management is different for every organization. But the fundamental concept includes managers and employees having an open line of communication to set, review, adjust and assess progress on the employee's goals and duties. Good performance management plans also include a discussion about how the individual's goals roll up into the organizational goals. 

Giving honest good feedback can be hard. You may not want to hurt someone's feelings. But if you're giving continuous feedback, it provides the structure and guidelines your employees want and need to do a good job. 

Both constructive and positive feedback can boost employee morale. Addressing mistakes head-on and immediately can prevent issues from escalating. Positive feedback is also a good way to show employees that you notice their good work and value to your company. It's also important to document any feedback given. Employee HR files should remain confidential but should also include notes about any feedback given to the employee. 

What is the role of HR in performance management? 

Employees may find it difficult to communicate openly and honestly with their managers. With a proper and structured performance management process, both parties have a better experience. Not only does this make for better work product and organizational growth, but it also gives employees a positive experience with your company. 

Your in-house HR team plays an integral role in performance management. Managers determine what employees do, but that doesn't mean HR takes a back seat. It's the job of HR to set up the performance management process, ensuring that managers and employees follow the process. HR also mediates any issues that might arise with an employee's work performance.  

Your internal HR team is necessary to ensure that each player in the performance management process understands what's expected of them. HR also needs to make sure the system works correctly and addresses any issues immediately. 

How does HR outsourcing make a difference? 

When you partner with an HR outsourcing company, your internal HR team will shed many of the mundane, repetitive, and complex tasks that take their attention away from your company's performance management process. Some of the HR functions outsourced include: 

  • Payroll 
  • Tax remittance 
  • Benefits administration 
  • HR administration 

Attracts High-Quality Employees 

When you outsource HR tasks to a Professional Employer Organization (PEO), your company has the chance to offer your employees superior benefits. When you join a PEO, you gain access to the PEO's master healthcare plan. The PEO has the leverage to negotiate with insurance companies because the PEO becomes the employer of record for all of its client's employees. This relationship allows the PEO to get high-quality healthcare at Fortune 500 prices. 

It also frees up your internal HR team by shedding the administration of these benefits. The PEO you choose to partner with will take on the complex and time-consuming task of benefits administration. This gives your internal team time to focus on providing other benefits to your employees and ensuring the performance management process stays updated.  

All of this together serves to provide your company with a best-in-class benefits package. Aside from salary, a stellar benefits package is the most desired benefit a company can provide to employees. With a benefits package that wows, your company can attract top talent.  

Increases In-House HR's Bandwidth 

Without HR outsourcing, your in-house HR team has to take a great deal of time and energy focusing on mundane administrative HR tasks. They may have to deal with complex HR issues like benefits administration and compliance. 

By shedding this load from your internal HR team, your HR employees suddenly have more time to ensure that your employees get the attention they deserve. This often includes improving on and revising your company's existing performance management process. By supporting your business strategy in this way, HR plays a key role in helping your business grow. 

The Right Partner Helps Your Team Thrive 

Small- and mid-sized companies often overlook the value HR provides to their employees and, ultimately, their business. Through a structured and up-to-date performance management process, your managers and their employees get the support they need to ensure open and consistent communication. This serves the end goal of achieving key metrics and continuing your company's growth.  

The most effective way to do this is by partnering with a trusted HR outsourcing company. By shifting the burden of your company's mundane and time-consuming HR tasks to an HR outsourcing provider, your in-house HR employees also get the support they need to focus on improving your performance management process. The most comprehensive HR outsourcing partner is a PEO. 

When you partner with the right PEO, your employees and, ultimately, your company, thrive. 


Which HR Functions Should Your Business Outsource?