The Pros and Cons of Outsourcing
Your HR Department
HR could literally make or break a business, and still, few small businesses have the expertise needed to run it competently. This then results in higher turnover, unreliable or untrustworthy employees, and poor results on the floor. Not being able to attract and retain employees is also a major issue for many, but one that could be solved by outsourcing. It’s not always the best solution for everyone, however, and it does have a few drawbacks. Let’s take a look at some of the pros and cons of outsourcing your HR department.
One of the benefits of outsourcing HR is that you will have access to a complete team of professionals. And you’ll only have to pay them for work done instead of having someone in-house who might have to get creative from time to time to justify their pay. If you don’t want to waste money and you don’t feel like your needs are extensive enough to hire someone just for that, then you should consider outsourcing.
You can choose to outsource specific tasks as well. You could outsource tasks that take a lot of time but don’t necessarily require guidance, training, or personalized knowledge, such as independent contractor compliance, payroll, mass recruiting, or background checks, for instance. Even some larger companies will choose to outsource tasks like these, and this is where you stand to gain the most.
Lack of Human Touch
Human resource departments are about people and they often deal with very personal situations. There might be cases when your HR department will have to speak with an employee who has suffered a serious injury, or you might need to speak with their family, for instance. Not having someone in-house means that you will lose a certain level of connection between management and employees. However, this can be improved by working with the right team.
Concentrate on Your Core Functions
A lot of tasks and functions in HR will not give you any returns. Instead of wasting your time on these, you should consider outsourcing instead. This way, you and your employees will be able to concentrate on what you do best and will contribute to your bottom line. There are also much fewer chances of errors which could not only be costly and time-consuming but could put you in serious trouble.
Distance between you and the outsourcing service can also be an issue. Maybe you or one of your employees will wish to discuss something sensitive that they don’t want to talk about over the phone. Some will make it virtually impossible to meet them off-line. This could become more serious as you start scaling and bring more employees in. That’s something you’ll have to prepare for and discuss with the team you are intending to work with.
This is also why it’s always better to work with a service that is based where you are, even if you’re going to communicate online most of the time. If you’re in Salt Lake City, for instance, there are plenty of HR outsourcing Salt Lake companies that can help. PEO and HR outsourcing Salt Lake teams like G&A partners can handle things like small business payroll, safety and security protocols, health and insurance benefits, and more, so don’t hesitate to check them out.
Offer Benefits that Work for You and Your Employees
Benefits are something a lot of small businesses struggle with. Either they get too generous and devise plans that don’t work for them, or they try to give as little as possible. If you’re in a very competitive sector, you also have to be able to offer competitive benefits packages. Comprehensive packages should include multiple products like a 401(k), health, vision, disability, etc. You might also want to give your employees different health plan options so they can choose the one that is the best for them. This is something that can be very difficult to do without the proper expertise, but it will be relatively simple for a skilled team.
There are many benefits to having someone on the ground that you can contact any time there’s an issue. Depending on who you work with, it could take a while for you to get answers when you need them the most. This is why a performance clause should be included in any service contract. You should also review performance at the end of each year and see if the service is really benefitting your company. If it isn’t, you should renew the contract.
Access to Better Technology
One of the things small businesses love about outsourced HR is that you won’t have to manage, file, and compile mountains of paperwork. Your provider will have access to state-of-the-art technology that will allow you and your employees to access important information whenever needed. You won’t have to care about compliance as much either and worry about not filing important payroll forms if you decide to outsource that function as well. Some will even manage onboarding and personal records digitally, allowing employees to sign documents virtually instead of in-person.
You Might Still Need to Have a Person in Charge of HR In-House
You should know that you might still need to have someone in charge of HR on your team. They might not be as involved, but they will still need to check on the work that is being done by your outsourced team. If you don’t have someone, you run the risk of your HR team and company being on two different pages. They also need to fit your company’s culture since they will be working so closely with your employees.
These are some of the benefits and disadvantages of outsourcing your HR function. This could help you save a lot of time and money while gaining the expertise of a team that knows HR inside and out, but you still have to be ready for some of the limitations.