Outsourcing HR: The Good, the Bad, and the Tasks

There are many reasons to have an in-house human resources team within your organization. From new staff onboarding to benefits management, having easy access to HR is a tremendous resource for any organization with a growing workforce.

Still, there are many instances where outsourcing your HR needs makes more sense. According to the Society for Human Resources Management, there are definite advantages to outsourcing HR tasks, among them a focus on strategy, improved compliance and accuracy, and a chance to leverage technology to streamline tasks and costs.

Let’s look at some advantages of HR outsourcing—also known as HRO:

  • Reduces costs. The fewer employees on staff, the smaller the payroll. By outsourcing, you are paying for what you need, not paying for what you don’t need. Whether it is a contract that spells out what you are getting or an hourly rate, you will end up paying less for the service than someone you have to pay a salary too. You will also save on the cost of benefits and payroll taxes
  • Allows HR to focus and be more strategic. An HR staff removed from the distracting elements of the company’s day-to-day operations can be more productive, especially regarding long-term goals like recruitment.
  • Offers more expertise and services. An outside agency who focuses solely on HR offers expertise in areas you might not have thought of and they have the staff to grow with you and take care of all your needs. Because the services they offer are wider, you can add services as needed, keeping your costs lower and your time spent growing your company.
  • Less burden on a leaner staff. HR is arguably one of the hardest-working parts of any organization. If it remains the same size while the rest of your staff grows in leaps and bounds, then tasks are bound to pile up.

Of course, you don’t have to outsource everything. Consider maintaining a slimmer HR staff in-house while outsourcing some of the more time-consuming tasks. Here are four tasks that can be outsourced for maximum results:

  1. Employee relocation. Employees who are moving to start or continue working with your company likely require highly personalized assistance. Avoid a major time crunch and hire someone else to handle it.
  2. Employee handbooks and policies. Your employees deserve the most up-to-date information about workplace policies and procedures, but maintaining what is essentially your organization’s bible may fall by the wayside in an overburdened HR department.
  3. Temporary staffing. When you hire short-term employees, you are constantly recruiting and onboarding new staff. Consider keeping full-time recruitment in house and collaborate instead with an experienced temporary staffing firm.
  4. Benefits and payroll. It’s a no-brainer to delegate this task, and as long as everyone gets paid on time, no one will complain. The same goes for benefits packages—when your employees have questions or concerns about coverage, let someone else address them.

As with every new strategy you implement, you must consider the disadvantages. Let’s look at the some of the potential risks of outsourcing HR:

  • Organizational resistance. Change is hard, even when it means progress. Employees accustomed to having easy access to HR might grumble about taking it outside of the company.
  • Reduced service levels. An in-house staff ensures dedicated focus to your company. When you outsource the work to an agency, you share resources with other client companies.
  • HRO vendor’s failure to deliver. Part of the reason you prefer having everyone under the same roof is to monitor workflow. When you outsource tasks, you risk an invisible workflow with potentially lackluster results.
  • Changes or disruptions in the HRO vendor’s business. When you sign on with an outside agency, you are buying into the way that staff currently operates. A major disadvantage of outsourcing is how to deal with a shift in an HR company’s strategic mission. Avoid this predicament with a shorter contract—you can jump ship if your HRO changes its strategy.

If it’s worth it to outsource at least some functions, try it on a temporary basis. In the end, if you’re thinking about how to better serve your growing staff and their HR needs, then it means your company is heading in the right direction.

Photo Credit: philippineoutsourcers Flickr via Compfight cc