Wondering if outsourced HR services are right for your business?
Many businesses are now choosing human resources outsourcing for a variety of reasons. In fact, as many as half of all large companies today outsource at least some of their HR. Should your company join them?
Outsourcing HR comes with a lot of benefits, but it’s not all fun and games. There are a few things that might give you pause before deciding to outsource.
In this guide, we’ll go over all the pros and cons that will help you make the right decision. Keep reading to find out what’s the best move for your business.
Outsourcing HR: The Pros
Many companies, even small and medium ones, can benefit a lot from choosing to outsource HR. It can free up employees’ time and improve productivity, even when your company has limited funds.
Wondering if HR can help your business beat the competition? Here are the top pros for outsourcing HR.
1. Manage Risks
Staying proactive helps avoid lawsuits, preventable accidents, and more. However, it’s hard to stay abreast of the constantly changing labor and employment laws. That can quickly become a full-time job, and you might not have the funds to pay an employee to do it.
When you outsource your HR, you’re hiring a whole staffing agency that can stay up to date on those things in the most efficient way possible. You won’t have to make sure your employees are staying on top of the latest workplace regulations and policies because your HR agency will take care of that for you.
Outsourcing HR makes it easier to comply with the law, reducing the chances of a lawsuit or another problem.
2. Save Money
Hiring an outside HR company can also be a smart move financially. When you hire an outside agency, you don’t need to keep the materials and office space on-site to host your own HR branch.
You’ll also save money in other ways by using an agency.
For example, you’ll be able to get the same rates for workers’ comp as a bigger company. The HR agency that you hire will take care of all their hiring and recruitment costs, taking the burden off your shoulders.
Plus, you’ll pay less in employee medical costs. Use the savings to reinvest in your current employees, increasing productivity and retention rates.
3. Gain Efficiency
An efficient workplace is a productive one. The experience, expertise, and technology offered by an outside HR agency will help your company be more efficient.
Instead of being distracted by HR concerns, your employees will be able to focus on doing their jobs better.
4. Improve Recruitment and Training
Recruiting and training new employees is one of the biggest time and money sucks a company can face. You might invest in someone who seems great for the job only to find out that they’re not the right fit after all.
If someone quits or gets fired, the scramble to replace them can put everything on hold. You might end up hiring someone without the best qualifications just because the spot needs to get filled.
However, an HR agency can quickly fill your vacancies with applicants from the pool that they’ve already interviewed and trained. This streamlines the process and saves you lots of time and money.
Outsourcing HR: The Cons
Outsourcing sounds pretty great now, right? There are a lot of benefits that come from outsourcing HR, but there are also a few less pleasant sides to it.
When you leave the HR responsibilities to another agency, you also give up a certain degree of control. Here are the things that you should keep in mind as you decide whether or not to outsource.
1. More Impersonal
Hiring an outsourced agency means they’ll do their job: handle payroll, fill vacancies, and deal with workplace issues. However, these agencies do the exact same thing for lots of companies. That means that they don’t really know anything about your unique company culture.
In-house HR often has close relationships with your employees, while outsourced HR may hardly know them at all. Some of the agency’s practices might work well at other companies, but do little or not good for yours.
2. Slow Communication
When an employee has a problem and your HR department is in-house, the employee knows who to talk to and can contact them right away. With outsourced HR, you’re more likely to run into delays in communication, and conflict resolution may slow down.
Sometimes, employees will feel that you don’t value them if this process is too slow. They might even start to worry that you’ll outsource their department next.
3. Less Control
Outsourcing means you’re relinquishing control over the daily HR operations and trusting them to someone else. HR is an important part of a company, so giving up this control is a big deal.
Certain HR decisions will get made without keeping you in the loop. You might even find that policies get enacted that you don’t agree with.
If the staffing agency you choose to work with is experienced and professional, they should help work with you to ensure that you’re comfortable with how they handle HR. However, you’re still not keeping control over the processes.
While letting go of this extra work is often worthwhile, you have to make sure you’re comfortable with the consequences.
Is HR Outsourcing Right for You?
Deciding whether or not outsourcing HR is the right move ultimately comes down to the unique factors that influence your company.
However, many small, medium, and large businesses find that the pros of outsourcing HR outweigh the cons. As long as you get a reliable agency, outsourcing ultimately makes things better for your business.
When you outsource HR, you can focus more on other important tasks, such as promoting the best employees to leadership positions. Find out more about how that works here!