Frederick Tan, Negosentro | HR outsourcing isn’t just a worthless small business trend. By handing over certain HR functions to a qualified third party, your business can save significant amounts of money and run more efficiently than ever before.
However, when your HR team hears the word “outsourcing,” few are going to jump for joy. No department is thrilled by the prospect of potentially losing their jobs to cheaper third parties, and even overworked, underpaid HR professionals instinctively dislike the idea of relinquishing responsibilities. Therefore, if (read: when) you decide to outsource HR functions, you must be careful to choose the right tasks to hand over — and the right time to do it.
There is no definitive list of responsibilities that you should always outsource. Undoubtedly, some HR tasks are easier than others; for some businesses, that means it’s better to keep those tasks in-house, and for other businesses, it means outsourcing makes more sense. Ultimately, it is up to you to determine whether any of the following commonly outsourced HR functions would make your business more efficient in or out of house.
- Payroll — managing employee wage records, dispersing payments, and calculating relevant taxes. Payroll is perhaps the most complicated task relegated to HR, and it is often the first function to be outsourced.
- Benefits administration — establishing, maintaining, and processing employee benefits packages. Considering the scale of modern benefits options, you should not be surprised to learn that in-house benefits management costs several thousands of dollars every year.
- Recruiting — advertising, screening, assessing, and admitting new employees. Recruiting is extremely energy-intensive, and professional recruiters are more adept at identifying top talent.
- Background checks and drug screening — ensuring employees remain safe and competent at work. Employees are less likely to harbor resentment for third parties that test for criminal histories and drugs.
- Relocation — assisting in transition from one workplace to another. Third parties can help your business maintain productivity and reduce expenses during an office move.
- Coaching and training — maintaining and improving employee skills and knowledge. Professional development programs are among the most wished-for benefits among modern employees, but they can be difficult to organize in-house.
- Policy manuals and handbooks — drafting and publishing workplace rules. Unless your employees can reference a handbook, they won’t be certain of your business’s culture, and behavior could vary wildly.
- Independent contractor compliance — recruiting and managing contractors. There are a bevy of rules concerning how you utilize and pay independent contractors, and third-party HR providers can help you navigate those waters safely.
While deciding what functions to outsource, you should speak frequently with your existing HR directors and staff as well as other employees. Such feedback will help you understand where your HR department is weak — where in-house HR professionals lack the resources to perform adequately — and where non-HR employees believe HR could improve.
Eventually, you will need to inform your HR department of your outsourcing intentions. Good business practice dictates that you should maintain transparency with all levels of your small business, which means you should be honest from the outset that you hope to use a human resources outsourcing company. Still, the transition from in-house to outsourcing can be a bumpy one, so you must seriously consider the following issues when you tell your HR employees about the change and begin taking steps.
- Timing. You don’t want to outsource too late and waste your business time and money — but you also don’t want to force your business to relinquish essential tasks before its ready. Instead, you should watch for warning signs that you should outsource and make moves as they become necessary.
- Explanation. From the very beginning of your business, you should strive for near-total transparency, which helps your workers trust your decisions and avoid panic. Still, when you move to outsource certain HR functions, you should make extra time to explain why outsourcing will benefit your employees and what their reconfigured responsibilities will look like.
Reassurance. While you do want to reduce HR’s workload and save money, you don’t want employees to walk out while you outsource. You can keep morale high and retention rates strong by reassuring existing employees that there is plenty of work, and rewarding employees who display confidence and persistence during the outsourcing process.