HR Outsourcing – What is it and is it right for my business?

Human Resources outsourcing is an increasingly common tool for businesses by allowing them to focus on their core competencies and outsource a number of people-related functions and advice to HR specialists. This can bring significant benefits and see organisations developing as better places to work and at the same time, increasing efficiency and in many instances, reducing costs. Thinking about trusting an external partner with your people approach can be daunting, but understanding the basics of HR outsourcing and the role it has to play will allow you to make an informed decision about whether it’s right for you. First of all, why do I need HR? Human Resources (HR) plays an integral role in businesses of all sizes, but it can be an area which receives little attention because so many business leaders and managers are already well-versed in workplace relations. However, HR is a professional discipline in its own right and the proper application of this technical knowledge can significantly improve organisational sustainability and effectiveness. The development of an organisation’s employment practices can have a positive impact on the morale and productivity of people employed in the business. With the experience of an HR specialist, employers can proactively plan their approach to recruitment and retention, training and development, remuneration and reward and employee engagement. For many businesses, recruiting an in-house HR advisor will be a popular option. However, SMEs, start-ups or other businesses that can’t afford the overhead costs of an in-house HR team will need to think carefully about whether their HR needs constitute a full-time role. That’s where external HR companies come in… What is HR outsourcing and what are the benefits? HR outsourcing involves bringing in expertise from a third-party company to support with any or all of the company’s HR needs. This can include recruitment, contracts, policies and procedures, and support with employment administration or even strategic direction-setting. It isn’t just relevant to small businesses, either. Outsourcing and using external HR providers is also suitable for larger businesses with an internal HR function but who need additional support for any reason. Outsourcing HR can save businesses time and money. By working with an outsourced HR specialist, you’ll be freeing yourself up to spend your time working in the business and doing the work only you can do. There are also cost benefits which come from getting your HR support and advice from a supplier who isn’t a permanent or full-time overhead cost. Finally, an external HR specialist can keep you up to date on changes in employment legislation and best practices which can be tricker to do if you aren’t a member of professional institutions like the Chartered Institute of Personnel and Development (CIPD). What should I consider in choosing an outsourced HR provider? If you’re going to seek support from an outsourced HR partner, there are a number of things to consider when making your choice and handing the keys over to your business and your staff. Choosing the right outsourced HR provider is key for employers who wish to save on their overall HR costs and ensure efficiency. When selecting an external HR service provider, employers should consider the objective and scope of their HR strategy and make sure that their HR department is able to meet its key functions. They should also ensure that the external provider has the right skills, experience and knowledge to take on specific HR functions and that they are capable of handling the full range of human resources activities with the same dedication as the employer’s internal HR department. Lastly, employers need to ensure that outsourcing HR services will benefit their employees and improve productivity overall. By taking the time to weigh up the pros and cons of outsourcing HR and understanding the specifics involved, employers can ensure that outsourcing is the right decision for their business. Considerations Before Outsourcing When a business is considering working with an outsourced HR provider, there are several points to consider before making a decision. Firstly, you’ll need to think about what you want from an outsourced HR partner and the type of support you’re looking for from them. It can be helpful to consider the tasks or areas of advice which would have the greatest impact on your business if they were taken care of by an HR specialist. Doing your research on the ways in which different outsourced HR and HR consultancies work is also crucial, if you’re looking for on-site support or to work with one nominated point of contact, find out what the options are and whether this type of service provision will work for you. Vitally, you should check the credentials of the organisation you’re considering working with. Do they have knowledge and understanding of the industry you work within? Are their HR specialists members of the Chartered Institute of Personnel and Development (the CIPD)? Knowing that any partner you choose to work with is up to date with employment legislation in the area you operate in is essential. If you are interested in outsourcing to an HR provider or if you are just looking for further information visit our (HR Partnership).