Before you meet with any human resource companies, assess what services your business needs. Do you need only payroll processing and 401(k) plans, or a full range of benefits and employee handbooks? Many human resource companies offer "a la carte" options of picking and choosing services; others offer bundled services. This allows you to select the HRO provider who can implement only the functions you want.

Also, determine when you would like an HRO provider to start. It can take human resource companies a few days or several weeks to get started, depending on how complex your needs are and the availability of their staff.

Next, consider the types of human resource companies that would best help your business. In general, there are three levels of HR experts:

1. An HR administrator files paperwork, makes sure benefits are in place, and verifies that the company is compliant with internal policies and state and federal laws.

2. The HR generalist acts as a tactician, executing HR strategies. They handle hiring and firing, benefits analyses, and compensation reviews.

3. A senior HR executive provides high-level assistance by consulting with management, discussing hiring strategies, developing growth plans, and working on the overall goals of the company.

Most businesses can use components of all three, but may not be able to afford three separate HR employees. An HRO provider can staff your business with people possessing all three qualities. If they can't, select the one that best fits what you need.

When evaluating human resource companies, go into meetings as if you are hiring a full-time HR director. Conduct a thorough interview and learn what projects they have conducted, their approaches to their work and how they will add value to your organization. You want to make sure they are a good fit with your company and employees.

Consider success stories with a dose of skepticism. Don't take their word at face value. Instead, request documented proof of an HRO provider's success stories. If they claim to have saved Company ABC $50,000, ask them to demonstrate how they achieved these results.

Find out what kind of on-site services you will receive. While human resource companies typically work outside your office, they should be making regular trips to your company to discuss any issues or upcoming policy changes with you and your employees. You also might want to confer with them for advice on a particular issue that needs an immediate solution such as an employee dispute, so ask about their policies and response times in emergency situations.

After you receive proposals from multiple human resource companies, take the time to meet and prescreen the staffers who actually be working on your account. This will let you decide if you can work with them, which is critical given the good communication necessary to have a successful partnership.

As with any major purchasing decision, checking references of human resource companies is crucial. Ask to speak with an HRO provider's previous clients - particularly companies in industries similar to yours. Here are some questions you may want to ask:

• How long did it take to get started?
• Did the HRO provider help streamline administrative tasks?
• Did you realize the cost savings the provider talked about?
• How did your employees feel about the changes? If the changes were "behind the scenes", did they notice?
• Were there any problems in the relationship? If so, what did the provider do to iron them out?
• Was there a particular incident that they helped your company with that prevented problems down the line?
• Did they consult with you before making any big decisions for your company?
• Do you feel your company is better off having worked with an HRO provider?