Should You Hire or Outsource HR?

The first step in determining whether you should hire HR or outsource HR is deciding exactly what you want from HR. 

Taking the time to really consider what you mean by “HR” will support you in the decision-making process. It will also make it easier for the person/company that you decide to work with to succeed.

HR is very broad. It covers everything from HR administration relating to joiners and leavers, all the way through to strategic HR.  HR can include providing management training, dealing with employee relations issues, such as grievances and disciplinaries, and supporting company or departmental restructures.  You need to be very clear exactly what your business needs from HR. This will help you ensure that you pick the right option.

Having decided what you want from HR, take some time to consider whether your activities are a permanent ongoing requirement or whether they are a short-term need.

• There are the one-off HR projects. Perhaps you have realised that you want to implement an HR system. Maybe you want to do some work on creating policies and tidying up your documentation. Hiring someone on a permanent basis to undertake these tasks could prove expensive. You could quite quickly find yourself with a resource who has nothing meaningful to do.
• There will then be the ongoing HR requirements. These will likely be activities around recruitment, managing joiners and leavers, dealing with any employee issues that arise. It could also be supporting annual performance review and salary review processes and managing absence. This is not the full list but should give you some ideas.

So, take your HR list and split it into projects and ongoing requirements.

• Where does that leave you?
• Do you now have a clear picture of what your ongoing HR requirements are?
• Looking at this list, do you think it comprises of tasks that you feel would be better performed by an internal resource or are they tasks that you would feel comfortable handing over to an HR outsourcing provider?

When we are working with a new client, we have a questionnaire that we ask them to complete that helps them to define what they would like from the HR outsourcing service. You can contact us for a copy of our HR outsourcing questionnaire to help with your thinking.

Any outsourcing provider, us included, will tell you that you can safely and confidently outsource all HR activities.

This is largely because, whilst you are outsourcing the work, you are retaining full responsibility for decision-making processes and will have full input into what happens.

However, you need to be confident as a business that you are happy to outsource key HR tasks.

The tasks that businesses are usually quickly comfortable to outsource are:

• HR administration processes – managing the process of creating and issuing offer letters and contracts, taking up references, making sure IT are informed of starters and leavers etc. These are all tasks that can be easily handed over to an HR outsource provider.
• Payroll liaison – if you have a payroll provider but currently spend time each month liaising with them on changes, this is something you can easily outsource. This works particularly well if the HR outsource provider is also taking care of all your HR administration processes as they will have all of the information they need.
• Recruitment support – the process of liaising with recruitment agents, posting job advertisement, collating and screening CVs, arranging interviews are tasks that can be very time consuming and can be easily outsourced.

These are the easy decisions. Basically, anything HR administration related are activities that businesses can be very happy to outsource. But what about the rest?

When you think about HR, a key element that businesses think about is support to employees and managers and they can question whether this is really something that can be successfully outsourced.

Take it from us, it can! If you pick the right HR outsourcing provider who works in a flexible way then you can successfully outsource these activities.

In our experience, outsourcing support to employees and managers can work better than having an internal resource. 

Internal HR resource can become attached to their colleagues. We’ve had clients reference their internal resource as having “gone native”.  Internal resources can sometimes struggle to do what is right for the business because they have developed personal relationships with their co-workers. 

This is of course a generalisation.  There are many, many excellent HR professionals out there who would not allow this to happen. However, it is a problem that can occur and that you will not face with an HR outsource provider.  An external resource will focus on delivering an excellent service to your business and taking actions that move you towards achieving your business goals.

If you have gone through the process of considering what elements of HR you need and think that outsourcing could be a good option for you, then do your research on HR outsourcing and outsourcing HR providers.

We have a series of blog posts that cover some of the key topics relating to outsourcing HR. Take some time to read up on outsourcing and really understand how it could work for your business.

There really is no right or wrong answer as to whether you should outsource HR or hire an internal HR professional. It will come down to what you feel is right for your business.

By following the process of defining what you’re looking for from HR, considering what you would be happy to outsource, undertaking some research into the advantages and disadvantages of HR outsourcing, you are putting yourself in the best position to make the decision that is right for your business.