Mastering the Art of Outsourcing: Organizational Services – Recruiting, Human Resources and Compliance
INTRODUCTION
In recent years, Institutional Investors have been repositioning their portfolios and preparing to deploy capital across new and existing real estate Investment Managers. Investors have an increasingly stringent focus on operational due diligence (ODD) before making capital commitments. Investors focus on the Manager’s in-house capabilities and the areas they choose to utilize third-party resources to conduct business more efficiently and effectively. A large part of this is organizational considerations, including human resources, compliance and recruiting practices, which are often outsourced if not handled in-house. In this blog, we explain these different operations and delve into the outsourcing considerations that should be taken.
Alliance Global Advisors would like to thank Moses Balian of Justworks, Adriana Hefel of ACA Group and Stacy Schiffman of Alliance Search Partners for providing their valuable insights from working in these types of organizational services to support the content of this piece.
ORGANIZATIONAL OUTSOURCED SERVICES
Recruiting
A company's success nearly always begins with its people and culture; attracting and retaining talent is critical to its growth and success. Organizational services such as compliance and human resources contribute to positive employee retention, but recruiting the correct talent is the root of the company’s growth.
Companies in all industries are looking to refine their teams and maximize operating cost efficiency; choosing an expert to do so could be necessary to achieve growth goals in a timely manner. Many elements go into attracting and selecting the right fit, and when choosing a path, it is most important to choose someone who is aligned with and understands your company’s industry and goals.
Services provided by executive search firms can vary depending on the firm's expertise. Some firms are industry-specialized and bring valuable industry knowledge to the table to find the top talent. In general, search firm services can include:
Role assessment
Executive search and placement
Sourcing and screening candidates for various roles
Compensation insights and negotiation
Coordinating and managing the interview process
Onboarding assistance
Leadership consulting
Advising on organizational structure and strategy
DEI consulting
Succession planning
Professional development
Providing interim executives and professionals
Different approaches can be taken to outsource recruiting, and companies need to be aware of the different options available to them:
Retained Search Firm
Great for highly specialized roles
Search firm utilizes research capabilities and engages passive talent
Typically, three retainer payments throughout the lifecycle of the search
Fees generally range from 27-33% of the hire’s first-year cash compensation
Contingency Search Firm
Better suited for junior roles
A search firm typically sends candidates who are on the market without further research
Payment is made after successful placement – no retainer
Most charge 25-30% of the candidate's first-year salary
Q&A WITH ALLIANCE SEARCH PARTNERS - RECRUITING
Stacy Schiffman, Alliance Search Partners
Q: Why do companies outsource executive search instead of hiring internally?
A: Companies outsource executive search for various reasons, including access to a broader talent pool, specialized expertise in recruitment, confidentiality in the hiring process and the ability to fill positions faster and more efficiently.
Q: Is outsourcing executive search expensive?
A: While executive search firms charge fees, they can save businesses money in the long run by reducing hiring mistakes, minimizing turnover and securing top-tier talent who drive company success.
Q: How do I choose the right executive search firm?
A: Rule #1: Make sure you know exactly how the search firm can identify and attract key hires for your organization – Is the person selling you on their background actually running the search, or is that done by more junior team members with less experience?
Credibility of the recruiter(s) leading your search – will key hires respond to them?
A transparent and structured search process
Access to high-quality candidates through a tenured network
A commitment to confidentiality and professionalism
Q: What should I expect from a good executive search firm?
A: You should expect regular communication, a customized search approach, detailed candidate assessments and a commitment to finding the best fit for your company’s culture and goals.
Human Resources
Human Resources (HR) departments are critical to a company’s culture and to ensure that potential risks inherent in people and employee management are mitigated through proper processes.
HR services are typically tailored from company to company, and Managers need to weigh their need for control, complexity and cost of human resources activities.
A higher overall cost typically comes with more control, and HR services become more complex at larger firms that have the capacity to handle HR in-house. Human Resources' best practices and processes are constantly evolving, so there is a need to stay on top of these developments, and outsourcing HR services could make this easier.
There are three primary options for handling human resources needs at a company:
In-House HR
HR department, where the company manages all HR functions internally
This model is mainly used by larger companies with complex internal HR needs and a desire for complete control over internal HR functions
These require proper staffing and the cost of launching an internal non-revenue producing department internally (training, software, staff)
Human Resources Information System (HRIS)
A software system for managing your company’s HR tasks and general workload
This model is mainly used by small- to medium-sized businesses looking to automate basic HR needs and improve operational efficiency around these
The users of the system at the company typically represent the HR department of a company with relatively simple HR needs
Professional Employer Organization (PEO)
Outside companies hired on to co-employ the current staff, taking on a significant portion of HR responsibilities at a relatively lower cost
These are representative of outsourcing HR services and are mainly used (but not limited to) by smaller businesses with limited HR experience
PEOs will generally provide bespoke pricing aligning with the level of HR services needed but can offer comprehensive HR support or access to certain benefit plans
Q&A WITH JUSTWORKS – HUMAN RESOURCES
Moses Balian, Justworks
Q: How does your firm tailor its services to meet the unique HR needs of companies, and how has your firm adapted to meet changing trends in the HR space?
A: “HR isn’t a one-size-fits-all game—what works for a tech startup won’t necessarily work for a boutique real estate firm managing a dispersed team of brokers, analysts and property managers.
This space is in a state of perpetual evolution—what worked five years ago might be archaic today. We've stayed ahead by focusing on two things: compliance resilience and people-first innovation. For real estate firms, that means ensuring that everything from independent contractor classifications to state-specific labor laws are up to date while also integrating technology that simplifies complex payroll and benefits management.”
Q: What do you see to be key considerations moving forward?
A: “Workforce mobility, regulatory flux and talent acquisition will define the next era of HR in real estate. The industry’s reliance on a mix of salaried employees and commission-based workers presents unique compliance and retention challenges that firms can’t afford to ignore. Additionally, as cities push for more aggressive labor protections and tax implications continue to evolve, real estate firms need an HR strategy that’s both preemptive and adaptive. Staying ahead isn’t just about reacting to change—it’s about architecting a workforce model that’s resilient in the face of it.”
Q: How can real estate firms ensure compliance with evolving labor laws and regulations while maintaining agility?
A: “Regulatory compliance in real estate is a moving target. Between changes in independent contractor laws, wage transparency requirements and multi-state employment complexities, staying compliant requires more than just an annual handbook update. The key is to build compliance resilience—having processes in place that can adapt in real-time. That means leveraging HR technology to automate compliance tasks, ensuring broker agreements and classifications are airtight and working with HR experts who can help you anticipate, not just react to, regulatory shifts. A well-structured compliance strategy isn’t a constraint—it’s a competitive advantage.”
Compliance
As real estate investment managers navigate a complex regulatory environment, outsourcing compliance functions can enhance efficiency and mitigate risk. Compliance service providers offer expertise in regulatory adherence, risk management and corporate governance, allowing firms to remain compliant while focusing on core investment activities. Ensuring compliance with regulations and industry standards is crucial to a firm’s culture and proper risk mitigation.
Key Benefits of Outsourcing Compliance
Regulatory Expertise – Ensures adherence to evolving regulations such as SEC and AIFMD, reducing exposure to legal and financial penalties
Risk Mitigation – Helps identify and address compliance risks through audits, monitoring and proactive strategies
Operational Efficiency – Streamlines regulatory filings, reporting and policy implementation, easing the burden on internal teams
Technology Integration – Leverages compliance management software for automated reporting and regulatory updates
Scalability & Flexibility – Offers tailored services, from one-time registrations to ongoing monitoring and complete compliance oversight
Key Considerations for Selecting a Compliance Provider
When selecting a compliance outsourcing firm, investment managers should evaluate the following:
Industry Experience – Familiarity with regulatory frameworks applicable to real estate investment managers
Service Scope – Availability of core compliance services, including audits, filings and ongoing monitoring
Technology & Tools – Use of automated compliance solutions to track regulatory changes and streamline reporting
Regulatory Adaptation – Processes for staying updated on evolving regulations and integrating necessary changes
Support & Training – Level of assistance during audits and access to training programs for internal teams
Cost Structure – Comparison of pricing models, including one-time support, retainers and bundled service packages
By outsourcing compliance functions, investment managers can maintain regulatory integrity while optimizing internal resources. Careful selection of a compliance provider ensures alignment with business needs and regulatory expectations.
Q&A WITH ACA GLOBAL – COMPLIANCE
Adriana Hefel, ACA Global
Q: What Core compliance services are you providing Managers or incorporating at your firm for compliance purposes? Are there additional ancillary compliance services offered or implemented?
A: Adviser Compliance Associates, LLC, d/b/a ACA Group or ACA, provides Managers with bespoke compliance solutions that are tailored to their business needs. We help startups to develop their compliance program, as well as register with the U.S. Securities and Exchange Commission (“SEC”). Once they become SEC-registered investment advisers, we help them with the implementation and maintenance of their compliance program. We assist and work together with new and established Managers to conduct compliance and electronic communication reviews and help them prepare for SEC exams through our mock SEC examination solutions. Many of our clients view us as a trusted partner who provides a “one-stop shop” for all their compliance needs.
Our technology, staffing assistance and outsourced CCO solutions address some of the challenges (e.g., resource constraints, etc.) that many new and established Managers face. ACA’s regulatory technology platform, ComplianceAlpha, streamlines risk and compliance activities with automation, analytics and unified workflows.
When Managers build their compliance program, they also have to consider their cybersecurity. The SEC has been focusing on cybersecurity for the past ten years or so, and it is the SEC’s expectation that Managers build a robust cybersecurity program to safeguard their client or investor information. Our Aponix cybersecurity and privacy solutions provide support to Managers by performing risk assessments, vendor and M&A diligence services, network testing and advisory services.
Q: What are the risks of not implementing the proper compliance processes? What are the beginning steps to rectifying risks that exist due to this?
A: Investment management is a very highly regulated industry and governed by strict regulatory requirements. All SEC registered investment advisers are subject to federal securities laws and regulations. Investors also expect Managers to implement a strong compliance program.
In this situation, a firm should obtain a gap analysis to identify potential gaps in procedures and align them with regulatory expectations. If resource constraints are the reasons for the firm not being able to implement the proper processes in compliance, the firm should consider engaging a consultant who could efficiently help to strengthen the compliance program. Engaging a consultant to build a strong compliance program is a good investment to make.
Q: How often do you provide compliance reports, and what is your process for ensuring a Manager remains compliant with changing regulations?
A: Because the SEC’s Compliance Program Rule 206(4)-7 under the Investment Advisers Act of 1940 requires investment advisers to annually review their policies and procedures, we generally provide our reports upon the completion of our reviews. We keep our clients up to date on newly adopted or amended regulations through our regular check-in calls, ACA Alerts and Insights that are posted on our website.
Q: What specific regulatory frameworks are you most familiar/working with most often in private real estate (i.e., SEC, AIFMD)?
A: Most of the ACA employees based in the U.S. are most familiar with the SEC rules and requirements. However, the ACA U.K. Regulatory Compliance team is familiar with both the U.K. and U.S. financial services regulations.
CONCLUSION
As real estate investment managers navigate an increasingly complex operational landscape, outsourcing key functions such as recruiting, human resources and compliance has become a strategic necessity. Leveraging external expertise can allow firms to streamline operations, reduce risk and focus on investment performance while maintaining regulatory integrity and attracting top talent. Whether through specialized recruitment firms, HR service providers or compliance consultants, outsourcing can provide flexibility, scalability and access to best-in-class industry practices. However, Alliance has found that provider selection must be carefully considered to ensure alignment with business objectives, industry regulations and organizational culture. By taking a thoughtful approach to outsourcing through developing a clear plan, investment managers can enhance efficiency and build a resilient operational framework that supports long-term growth.
COMING SOON: MASTERING THE ART OF OUTSOURCING SERIES 2 – FUND SERVICES
Beyond organizational services, real estate investment managers are increasingly turning to outsourced fund administration, investment portfolio technology (PropTech) and placement agents to optimize operations and meet investor expectations. In Part 2 of our Outsourcing Services Series, we’ll explore how fund administrators support accounting, reporting and investor communication, the role of PropTech in streamlining data integration and analytics and when and why managers turn to placement agents for capital raising. We’ll also share expert insights on what to consider when selecting outsourced partners, potential cost structures and how outsourcing can drive efficiency and scalability.
ABOUT ALLIANCE GLOBAL ADVISORS:
Alliance Global Advisors is a women-owned consulting firm focused on empowering the institutional investment community to elevate best practices. Advising clients with over $870 billion in assets under management, Alliance partners with organizations to provide an independent perspective and innovative approach to critical strategic initiatives. Our partnerships allow senior management teams to focus on what matters most: diligently managing client capital, creating value and delivering exceptional returns in a performance-driven market.
Disclaimer: This blog was originally published in March 2025 and will be updated periodically to reflect changes in the industry. The content may contain or cite personal and/or professional opinions that differ from the views of Alliance Global Advisors.