As Human Resources evolves, so too do the ways companies work with it. Many businesses recognize the importance of the HR department, yet, HR professionals still find it difficult to gain access to the tools they need to build a successful HR department. Rather than providing the buy-in needed for improved HR tech, many companies have turned to outsourcing.
During the 2010s, outsourcing HR became more of a reality for many businesses. HR outsourcing is expected to continue to grow. Accessing help from independent HR consultants and HR agencies has impacted the modern HR department in many ways, some for the better and some, not so much.
Let’s look at the pros and a few of the cons outsourcing is having on the HR department.
Making Time for Core Competencies
Unfortunately, HR is often considered an unprofitable department. And because of this, it’s often left out in the cold. HR tends to be overlooked because it’s not known for creating products or generating revenue. This is a big mistake. HR is arguably the most important department since its focus is a company’s greatest assets—its employees.
With that said, for HR to function successfully it requires a lot of tools, technologies, time and effort. Outsourcing certain everyday functions (think automation, benefit administration, etc.) frees up time for your HR department to focus on strategy, employee engagement and satisfaction. This new focus enables HR to maneuver into a leadership role.
Compliance is a major priority for HR. Employment laws and regulations are continuously changing. Keeping up with these changes is vital to HR’s ability to support employers and employees.
When HR fails to stay on top of compliance, it can lead to costly fines. Outsourced HR generally means you’ll have access to at least one HR professional dedicated to maintaining compliance.
Improved Access to Technology and Tools
Getting buy-in for improved HR technologies is often an up-hill battle. Building a business case for why new technology (such as an HRIS) is important takes time and energy, which your HR department may not have, considering they’re probably overwhelmed with administrative tasks that new tech could handle.
Many companies turn to outsourcing HR for this reason. For independent HR consultants and HR agencies, getting and maintaining clients depends on them having these improved technologies. Otherwise, why would you outsource to them?
By joining with an HR agency or consultant, companies can gain access to the technologies that best support the HR strategy.
The Cons of Outsourcing
As with anything, there are always cons to balance out the pros. If you’re considering outsourcing some or all of your HR department, you’ll want to consider a few of the negatives.
Loss of In-House Expertise
When you outsource HR, you lose easy access to HR expertise. Without an in-house HR department, it becomes more difficult to field employee questions and concerns. Handling employee issues, conflicts and dismissals is difficult. HR professionals contain a level of knowledge on how to handle such sensitive issues legally and ethically.
Impact on Company Culture
It’s often not until you don’t have easy access to a thriving HR department that you realize its importance. Outsourcing HR can majorly impact your company culture. If you look past the administrative tasks HR handles, you’ll see that it also plays a major role in company culture.
HR handles inter-personal disputes, employee engagement and looks for ways to boost employee satisfaction. HR is often the bridge that supports communication between management and employees. For your staff, HR is often looked at as an employee advocate. For your management, HR is a guide, helping them navigate a constantly evolving workforce.
Outsourcing for the Future
There’s no guarantee that outsourcing your HR department will be a success. But there are some advantages to doing so, particularly when it comes to handling repetitive administrative tasks that can benefit from automation.
HR is an important department. Managing people (from new recruits to long-term employees and the C-Suite), it’s hard to imagine a fully outsourced HR department being a success. But, for companies unwilling or incapable of paying for improved technologies, outsourcing some aspects of your HR department, such as benefits administration, can support your HR department, and its strategic goals.