There are a number of reasons why an organisation might consider outsourcing its HR function – or at least certain aspects of it.
The organisation might have no in-house HR expertise. Or it might be growing and have HR demands placed on it – demands that exceed the capability of its in-house HR function. Or it might believe that its HR people are too consumed with tactics and are failing to play a role in the organisation’s strategic work.
Whatever the reason – it is prudent to consider whether or not such outsourcing best serves the interests of the organisation. Some HR providers will undoubtedly push an outsourced solution as the best way forward – but such pushing is evidently self-serving. What’s of more value to you is a nuanced consideration of your organisation’s needs – and whether outsourcing your HR function is in your best interests.
The typical benefits touted for such outsourcing are the savings of time and money.
First the time argument: Simplistically, the time you don’t spend on HR can be devoted to doing what you do best.
Next the money argument or, more accurately, the arguments:
Firstly, you can save the recruitment costs of HR staff and thereafter the ongoing overheads of HR staff. This can be particularly valuable if your organisation is below the size requiring a full-time HR resource.
Secondly, you can save the potential downside costs of winging it. You don’t want to incur costs/fines because your ignorance of some aspect of HR caused your organisation to make a significant mistake, for example, dismissing someone without due and proper process.
The arguments in favour of outsourcing do however extend beyond the simple ones of time and money.
For example, if you outsource, you shift the onus of being up to speed with all employee legislation from you to the external provider. They need to track legislative changes. You don’t. They need to track emerging case law. You don’t.
There is also the prospect that HR specialists to whom you outsource have broader experience than your in-house HR resources. Their work history may have brought them knowledge of different industry types and sizes, unionised or not, public or private sector, etc. And this richness and depth of experience and expertise is at your disposal. This is more than a fresh pair of eyes. This is a better and more nuanced pair of eyes. Your HR provider may have skills and knowledge that your organisation lacks. And they may be operating to a higher quality level than your in-house overstretched HR function.
When considering outsourcing you might be concerned that potential providers will have an overly-prescriptive one size fits all approach. If they do then don’t countenance using them. Outsourced solutions can and should be tailored to fit your specific needs. Indeed the provision of and openness towards such tailoring should be something you look for when considering an HR provider. Your HR provider should be able to provide a full spectrum of HR services – but be able to customise a solution to fit your needs – of course in a flexible way to allow for how your organisation’s circumstances inevitably change and develop over time.
This tailoring shouldn’t just be limited to deciding on what aspects of HR you need help with. It should also apply to how that help is provided – phone, on-site as required, on-site as scheduled. And the tailoring can extend further to a financial model that works best for you – be that per use and/or retainer.
You may indeed simply want an experienced consultant on site on an interim basis. This flexibility could be optimal in certain circumstances. Firstly it allows you to tap into their extensive experience in dealing with complex but close-ended issues. Secondly, it allows you to have them train your own staff to boost your in-house capability. In both scenarios, you avoid a long-term financial commitment.
Some organisations may fear the loss of control when outsourcing their HR function. Potential providers should be mindful of this. If they’re not then that’s another alarm bell. But you need not outsource your entire HR function. You could retain an in-house function –the in-house function can manage the provider – while also now being able to devote some time to higher-gain activities, for example, focusing more on strategy.
Another aspect of HR to consider retaining in-house is performance management. Strategy and performance management are core to organisations. Other aspects of HR lend themselves more to outsourcing, for example, the management of workplace investigations, recruitment and dispute management and resolution services. (See here for a more extensive list.) Another useful approach in deciding what aspects of HR to retain in-house is to “identify the things that HR does to increase the value of the humans within the company and keep that in house”.
If you are considering outsourcing, it can be beneficial to the outsourcing process for the in-house HR people to be involved in the selection process and in the management of the relationship with the provider. They can help ensure a cultural fit during provider selection. They are also best positioned to know what the knowledge gaps are that need to be filled. Their ongoing involvement can also help engender trust between the organisation and the provider.
And remember – there are many HR consultancies out there. But they’re not all equal – and are not all worthy of your valuable time and money. If you are to outsource you need confidence in the potential provider. Here are some tips on how to choose that HR provider.
To explore whether or not outsourcing or an interim HR resource might be of benefit to your organisation, call Mary Cullen, Patrick Foley, Keith Connolly or Liam Barton on 056 770 1060 or email email@example.com.