People Magazine

3 reasons it’s time to stop outsourcing Human Resources

Hr Outsourcing
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Why outsourcing all departments don’t work.

Tips for implementing a stronger in-house HR team.

HR technology to maximize your HR department.

When outsourcing does work.

How many departments and jobs do you outsource at your company? HR outsourcing and using contractors became wildly popular thanks to the Great Recession. Businesses of all sizes realized that they could save big by outsourcing. Outsourced workers don’t receive benefits such as healthcare or vacation leave. In some cases, outsourcing also means these workers aren’t on site and increasing overhead. However, outsourcing isn’t the best solution for all jobs.

Outsourcing departments: Yes or no?

HR outsourcing trends in the past 10 years include depending on third-party companies to take care of all HR needs. HR outsourcing can work for some companies, but it shouldn’t be the norm. Employees often depend on having a trusted, in-person team they can rely on.

When outsourcing human resources, many times you can “outsource” that sense of dependability and trust in-house HR teams. For example, who’s going to handle sudden personal matters? Some issues require immediate support from HR. An outsourced team can’t offer that.

Outsource HR for small business? Think again

HR outsourcing is usually chosen to save money. It’s rare that you can get more qualified experts when outsourcing HR. (It is possible to secure more skilled experts in other types of outsourcing, such as computer engineering). If saving money is the sole reason for HR outsourcing, you’re not doing your employees any favors.

Strengthen your HR Team

Here are the primary reasons to stop HR outsourcing:

  1. You aren’t really saving money. The money saved from outsourcing is more than spent due to a poor performing HR department. HR departments can help retain and nourish the best employees. When that’s not happening, you’re losing the most qualified employees.
  2. The latest HR tech is a game changer. When you have cutting edge HR tech available, there’s no need to outsource. Instead, equip your HR team with the best technology so they can focus on in-person tasks.
  3. You don’t really know what’s happening. If you’ve hopped on HR outsourcing trends, are you really in the know about what’s happening? Does the outsourced team have your business’ best interest at heart? What happens when you can’t walk down the hall and have a chat with your HR team?

You might be able to outsource a wide range of jobs, but when it comes to complete departments think again. Taking the human out of human resources is risky.

Tech help to the rescue

The only way to truly tell if your HR outsourcing is hurting you is to run the numbers. How was the turnover rate before outsourcing? How does employee satisfaction compare? If you’ve always outsourced or no longer have the numbers, it’s time to kickstart a new analysis. As you transition back to in-house HR, complete with HR tech, make sure you have the most recent numbers from your outsourced team.
There will always be an adjustment period, so plan accordingly. Track key figures, like turnover rates, strictly for at least 18 months. You might see more stability and employee satisfaction when you bring HR in-house.

When outsourcing works

Keep your outsourcing for specialized positions that are difficult to place in-house. Outsourcing is also a great option for some short-term jobs. If cost is still a factor, consider other avenues for saving.

Implementing new HR technology, offering some virtual work positions, and swapping out non-required perks for free options can help. For instance, negotiate with a nearby gym for discounted memberships instead of springing for an overly-generous paid vacation period.

When it comes to outsourcing, opting for HR outsourcing is often too risky. The department that manages the humans of your business needs to be invested and on-site.


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