With employees come HR activities and legal responsibilities. In the early days of a business set-up, these activities and responsibilities are typically met by the business owner or someone else who gets to wear the HR “hat”.
As time goes on, however, the volume and complexity of HR activities increases. This is when the business looks for a different way to get the HR support it needs.
Outsourcing is one option for businesses to manage their HR. There are several reasons why a company may choose to outsource HR.
When outsourcing HR, the success is of course, mostly down to the quality of the outsource provider. There are, however, some steps you can take to ensure the partnership is a success. In this blog post, we look at what a company should consider before outsourcing HR activities.
Time to read our post: 5 minutes
The questions answered in this post are:
1. What Are Your Expectations From Outsourcing?
When you outsource HR, it’s important to understand your expectations from the service.
You will have your requirements, such as which processes you wish the provider to perform and the volume of activities they will perform. This will often be dictated by the number of employees you have.
It is essential you understand that, when outsourcing your HR, you are not outsourcing your HR responsibilities.
When outsourcing HR, you are delegating the execution of key HR activities and gaining access to HR professionals. However, all decisions relating to your employees will remain yours.
What makes a successful Outsourcing relationship?
We find the most successful outsourcing relationships are created when employers understand that we are there to undertake HR activities and provide guidance, support, and expertise, but the buck stops with them!
If you are considering HR outsourcing and thinking that you will be able to pass all your people problems to a third party and they will have some form of magical way to fix them, it’s likely you’ll end up disappointed and frustrated.
Of course, all good HR outsource providers will work collaboratively and in partnership with you. However, it’s very important that you are realistic and understand where the responsibilities of the outsourcing provider will stop, and yours will start.
2. Do You Have Established HR Processes?
How Defined Are Your HR Processes?
A key element to consider when thinking about outsourcing is how well established the HR processes in your business are.
If your HR processes are well defined and familiar to all managers with robust supporting systems, then your outsource provider will quickly and easily adopt these, and the transition will be smooth.
Of course, if HR activities are currently being undertaken in an ad-hoc manner then the outsourcing provider will be able to advise you on processes that will be efficient. The will work with you and your management team to define and embed these.
The HR provider will have experience of executing processes for their other clients and can bring some standard processes with them. From this starting point, they will develop tailored processes to the specific requirements of your business.
Refinements and Changes to Processes
We also recommended that you be open to your provider doing things in a different way. A good outsourcing provider will work with you to understand exactly how you would like things done. However, there may be changes that are necessary in order for you to receive an efficient and controlled service. Typical areas to consider when outsourcing would be approval processes and signature of documents.
Your provider may want to put in some approval steps to ensure you are always aware of what is happening. An example would be a form that they would ask you to complete and sign that contained all the information needed for an offer of employment to be made. Additionally, an outsource provider will likely want you to use an e-sign system. This will be far more efficient than physical signatures on documents.
These types of controls are a vital way of ensuring that the outsource provider works within agreed parameters. The controls will offer your business protection as well as the provider.
Why not chat through your requirements to see what HR support is right for your business?
3. What Level of Physical Presence Would You Like?
When considering HR outsourcing, you need to think about how much physical presence you like. Then, be sure to understand how potential providers work in relation to providing onsite support.
It could be that you are very happy for all the support to be delivered remotely. Alternatively, you may feel it’s important for the provider to come on-site regularly. This will allow them to build relationships with your managers and employees.
A good HR outsourcing provider will structure the service in a way that works for you, but you need to decide what level of physical presence you would like.
If you aren’t sure whether onsite presence is necessary, our recommendation would be that you select a provider that offers this service. You can start by having some form of regular onsite presence. You can always turn this element of the service off in the future (if you select a provider that offers you that flexibility).
4. Who Do You Want to Access the Outsourcing Provider?
One of the questions you need to consider is who will be able to access the HR outsourcing provider.
You can have a model where only managers/senior managers can put requests to the provider. The alternative is that you have a model where anyone can contact the provider.
With the first model, if there is an employee issue, then a manager or senior manager can reach out for support but employees do not have access to the service.
Advantages of allowing employees access to the service
The advantage of this model is that employee issues remain within the business. Employees know that they need to speak with their line manager in the first instance. This means that the line manager remains fully aware of what is happening within their team.
There are, however, two key disadvantages with this model.
Disadvantages of allowing access
The first is that the employees don’t have anywhere to go if they have a matter that they would prefer not to discuss with their line manager. A key benefit of HR, whether it’s in-house or outsourced, is that there is a way for employees to get confidential guidance and support on issues they are facing. HR professionals are experienced in dealing with a vast number of people issues and will generally be far more skilled at managing tricky situations than line managers.
The second disadvantage is that dealing with people issues remains with the line managers. This can take up a great deal of their time. Of course, they would be able to access support from the HR provider in relation to working out how to deal with issues, but the matter will remain theirs to resolve.
The second model, whereby employees can reach out to the provider directly, clearly overcomes these issues. However, one disadvantage with this approach is that it can be more challenging to manage the service demand when dealing with employees directly.
Choose the Outsourced HR Model That Works for Your Business
What is right for your business will depend a great deal on your culture. Your chosen outsource provider should be happy to deliver the service in the way that will work for you.
A model that we frequently use with our outsource clients is that we start by supporting managers only. This enables us to build relationships with those managers, gain insight into the culture of the organisation and allows managers to gain confidence in us and our abilities. Then, the service gets opened to employees.
If You Want To Read More…
Manager’s Guide to HR Support for SME
Read our comprehensive guide on HR support for SME. The guide sets out the various ways that businesses can get HR support and the advantages and disadvantages of each option.
Why not chat through your requirements to see what HR support is right for your business?