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When was the last time you truly evaluated the performance of your company’s Agent of Record (AoR)? Many businesses work with AoRs to handle critical functions like payroll and compliance for their independent contractors—but over time, without regularly evaluating their performance, unnoticed errors can lead to issues down the line.
Small mistakes in compliance, payroll, or employee engagement can snowball into larger problems, from costly legal penalties to low employee morale. Without thorough evaluation, many companies fail to spot these issues until it’s too late. Sometimes, an AoR may overlook updates to local labour laws, mishandle employee data, or fail to respond promptly to issues—errors that could have been avoided with a more proactive approach.
In this blog, we’ll guide you through how to evaluate your AoR’s performance. We’ll focus on key performance indicators (KPIs) that can help you spot inefficiencies, compliance issues, or other problems that might be hiding beneath the surface. Staying on top of these metrics will help ensure your AOR remains a reliable partner in managing your workforce and business needs.
What is an Agent of Record (AoR)? What services should a good AoR provide?
Before diving into performance evaluation, let’s first understand the role of an AoR in modern businesses. An AoR is a third-party organisation that specialises in managing various HR functions, such as payroll, compliance, onboarding, and even global expansion for companies engaging independent contractors. A well-performing AoR helps streamline these processes, ensuring compliance with local and international laws while supporting your workforce’s needs.
Does your AoR provide comprehensive support across all necessary HR functions, from compliance to payroll and benefits? A reliable AoR should have the capacity and expertise to provide a wide range of services. These can include payroll processing, tax and benefits administration, compliance with local labour laws, global expansion support, and sometimes even recruitment and employee engagement. The primary goal is to ease the administrative burden on your HR team, providing seamless and compliant support for managing employees across different regions.
Why evaluating AoR performance matters
Evaluating AoR performance helps ensure that your provider is delivering on the promise of maintaining compliance, protecting your organisation’s data, and keeping employees satisfied. Failing to assess your AoR could lead to issues such as legal risks, compliance failures, or poor employee engagement—all of which can harm your business and eventually slow down your operations.
How do I evaluate the performance of my AoR provider?
The answer lies in regularly tracking and measuring key performance indicators (KPIs). These KPIs will provide you with clear, quantifiable insights into how well your AoR is performing and where there may be room for improvement.
5 Key performance indicators for AoR performance evaluation
KPI 1: Compliance and legal risk management
Does your AOR stay up-to-date with local and international labour laws to avoid compliance issues? One of the most important aspects of an AoR’s role is ensuring your business stays compliant with labour laws, taxes, and benefits regulations, both locally and internationally. Non-compliance can lead to hefty fines and penalties, which can impact your organisation’s financial health and reputation.Evaluating your AOR’s approach to compliance can help you mitigate these risks and ensure that your business stays on the right side of the law.
KPI 2: Data security and privacy compliance
Does your AoR implement strong data security protocols to protect employee data and ensure compliance?With cross-border data transfers becoming the norm, making sure that your AoR adheres to data protection standards like the GDPR (General Data Protection Regulation) is non-negotiable. Data breaches can be costly, both financially and in terms of brand reputation.
For example, a company based in the European Union might partner with an AoR in another region. If the AoR mishandles employee data or fails to comply with GDPR regulations, the business could face significant fines—up to €20 million or 4% of annual global turnover under GDPR.
KPI 3: Service responsiveness and communication
Is your AoR responsive to your inquiries and urgent concerns, and do they provide clear communication when critical issues arise?An AoR should be responsive to your needs, especially in serious situations. Whether it’s a payroll discrepancy or an urgent compliance update, fast and clear communication is key to maintaining smooth operations.
For instance, if there’s a payroll delay and your AoR is unresponsive, it can lead to disgruntled employees, affecting morale and even retention rates.
KPI 4: Employee satisfaction and engagement
Does your AoR contribute to positive employee experiences and ensure timely, accurate payroll and benefits management?Your AoR’s performance is directly tied to how well it supports employee satisfaction and engagement. A reliable AoR should help ensure that employees have access to timely payroll, benefits, and clear communication regarding HR matters. This can enhance employee retention and overall engagement.
KPI 5: Cost efficiency and ROI
Is the cost of your AoR services justified by the value they bring in terms of efficiency, compliance, and overall support?Finally, it’s important to assess the financial efficiency of your AoR. While cost should never be the only factor in decision-making, you want to make sure that your AoR helps you optimise HR administration costs without sacrificing the quality of service.
If your AoR is providing inconsistent service or requires excessive oversight, it may be costing your business more in terms of time and resources than it’s worth.
How often should I review my AoR’s performance?
Ideally, you should evaluate your AOR’s performance on a regular basis—at least quarterly. This allows you to adjust the relationship as necessary to meet changing business needs or to address any performance concerns promptly.
Additional considerations for evaluating your AoR
Aligning AoR services with business goals
Does your AoR align with your long-term strategic goals, including any global expansion or workforce management plans?
As your business grows and evolves, so should your partnership with your AoR. Make sure that their services align with your long-term business goals, whether it’s expanding to new markets or improving employee engagement.
How can I ensure my AOR aligns with my business goals?
Before you can ensure alignment, you need to have a clear understanding of your business goals. Whether you are looking to expand into new markets, improve employee engagement, streamline HR processes, or ensure compliance with local laws, outlining these goals will provide a foundation for evaluating your AoR’s contributions. Ensure your AoR understands these objectives and can tailor their services to support your strategic goals.
A reliable AoR should provide the services that directly contribute to your business needs. For example, if global expansion is a key goal, ensure that your AoR has the expertise to manage HR functions across multiple countries, handling key functions like payroll, benefits, and compliance in different regions. If employee retention is a priority, ensure that your AoR focuses on enhancing employee engagement and satisfaction.
Reviewing AoR performance regularly
Are you conducting periodic reviews to keep your AoR aligned with your business needs and to address any performance concerns promptly? Conducting regular performance reviews allows you to stay proactive in addressing issues before they become major problems. These reviews should be built into your relationship with the AoR and can include monthly or quarterly meetings to assess performance, address challenges, and adjust strategies.
Making informed decisions about your AoR
Evaluating your AoR’s performance is crucial for maintaining compliance, supporting employee satisfaction, and ensuring cost-efficiency. With the right KPIs, you can make data-driven decisions that optimise your partnership with your AoR and enhance your overall workforce management.
Regularly assessing AOR performance ensures that you stay compliant, protect your data, and keep your workforce engaged—ultimately contributing to the success of your business.
How CXC can help
Choosing the right Agent of Record (AoR) is crucial for your business’s success, but not all AoRs are equipped to meet your specific needs. Look for an AoR with expertise in compliance, industry knowledge, strong data privacy practices, fast service, and good customer satisfaction.
With over 30 years of experience, CXC is well equipped to help businesses compliantly engage and manage independent contractors, both locally and internationally. Our deep compliance knowledge reduces legal risks, while our efficient global payroll system ensures contractors are paid accurately and on time—without adding administrative burden.
Want to make sure your AoR is delivering? Speak to our team today to learn how CXC can help streamline your workforce management.
