HR Management Outsourcing – Is It the 2023 Solution?

Pros & Cons in a Tumultuous HR Environment

Over the course of the pandemic, the world, and many worlds within it, well – changed.

The world of HR Management was certainly one of these, and as you probably know all too well, long-accepted norms and practices were completely on their head. The switch to operating via a remote, or WFH (work from home) model presented many trials and tribulations for many organizations and employees.

While the decline(?), or recession of the pandemic saw many practices and ideas return to something that vaguely resembles normal — HR teams and staff still saw fallout. Up until the pandemic, outsourcing a business’s HR management was well regarded as good practice – but what about now?

While the pandemic caused organizations across the nation and globe alike to rethink many, many things – one of those that they may have had right, was HR management outsourcing. Let’s examine the pros and cons to see if HR outsourcing has persevered through the pandemic, remote work, and the great resignation – or if this strategy needs to be tossed like single-use plastics.

Pros

 

Gain Resources

Outsourcing without question saves internal resource time, and time is one of if not the most valuable resource going. While there are leaders who may have thought that taking a divide and conquer approach would mitigate the lost manhours, they are only hiding the truth from themselves. On average, businesses that outsource their HR management will gain about 24 manhours a week in the time that leaders are able to spend focusing on their main duties.

This idea doesn’t only apply to businesses that try to share HR duties among team members – outsourcing remains competitive, if not advantageous over those who employ a formal HR department or position due to the pooling of knowledge, experience, and resources.

Improve Employee Experience

A dedicated HR management partner is going to support not only the bottom line but also the experience of each team member that the organization needs to reach its goals. It can be very helpful to have a 3rd party manage that HR department’s duties – especially when dealing with personal matters or conflicts.

When employees become disgruntled, that degree of separation can help keep the trust and find resolutions easily. This isn’t the only way that outsourcing HR management will improve the employee experience. Using outsourced HR management often allows employees access to more comprehensive benefits packages. The improvement isn’t only for the business’s bottom line, but for the employees, and when they feel like they have something more to show for it, their experience improves.

This can have a cascading effect and contribute to a better company culture throughout the organization.

It’s like positive reinforcement: An employee that feels well taken care of will have better morale and be more willing and able to go the extra mile when the opportunity arises. This ripple effect is worth more to a business than can be accounted for on a spreadsheet.

Free Up Leaders

It’s never good for an organization or its leaders to get bogged down and in the weeds – taking on HR management tasks and issues takes time. Not only does it take time but it takes a considerable degree of care, knowledge, experience, and a way with people. Many leaders who are otherwise exceptional at carrying out their duties and leading teams often possess many of these traits – or have at least demonstrated a potential capability. But the problem arises as work piles up, and teams are put through their paces. HR management-related duties can sometimes end up on the back burner. This can cause issues to arise and draw focus from the job at hand.

Outsourcing HR management to a qualified and experienced partner allows for the organization’s leaders to perform at their best. They are able to knock out their core roles while each and every employee has a dedicated team to help them reach their full potential too. Employee experience is only one facet that can play host to the negative consequences of putting too many roles on a leader’s plate:

Improve Business Compliance

Most if not all legitimate businesses and in fact industries as a whole operate within the scope of some (or several) regulatory bodies. Maintaining compliance with the local payroll regulations, applying the correct deductions, and ensuring that all work completed meets quality assurance and control – it’s all work.

When the organization’s leadership is freed of HR management obligations through outsourcing, all of the energy that went into running that department can be redirected elsewhere. Not only is HR-related compliance in things like payroll improved, but compliance elsewhere in the industry can be given more focus as well.

Focus on Core Activities

As with the previous two points, freeing up leadership of daily HR management responsibilities allows for a greater focus on the other moving parts of a business. There isn’t one business in existence with nothing to improve internally – that thing the company is trying to get to, but keeps inevitably falling to the bottom of the priority list.

When team members and leaders are able to divert their time and energy savings to their core responsibilities, the company begins to operate more smoothly as a whole. All of a sudden there is time in the day to get a little bit more work done than there was before. This effect is accumulative and teams often find themselves able to finally tackle those tasks that have been sitting idle – taunting them.

This kind of success is contagious in a company – and while this article has pointed out many ways in which outsourced HR management helps relieve leadership of their HR task load, it doesn’t have to replace an internal HR team – quite the opposite, in fact.

Allows Internal HR to Operate Strategically at a High Level

While it’s easy to misinterpret internal and outsourced HR management as being mutually exclusive, the fact is that they are far from it. Working in conjunction with an outsourced HR management firm, the internal team – much like the leadership in the aforementioned pros – is relieved of sometimes burdensome day-to-day tasks. This frees them up to operate from a more advantageous standpoint – at a higher level.

Rather than run around fixing payroll issues and dealing with the arbitrary day-to-day task load most HR managers face – they are able to look at higher-level issues. This ability to strategize from the bird’s eye level may be the deciding factor in an HR department’s and indeed a business’ performance as the world changes and adapts to things like a global pandemic, or the end of one.

Expansive Capabilities and Specialized Expertise

Whether HR management is outsourced fully, or integrated with an in-house team, the organization stands to benefit from increased expertise – in one of two scenarios. In the first of these, the HR management is fully outsourced. The company gains the resources of an entire HR team – often for equal to or less than the cost of hiring an internal manager. The ROI on this decision is immediately apparent in that two brains are inherently better than one.

In the second scenario, a business outsources day-to-day HR operations and leaves the high-level decision-making and strategizing to an internal, industry-experienced team. While retaining the capabilities of the first scenario they are also utilizing their in-house expertise for a fully functional and capable HR team, through outsourcing.

Improve HR Efficiency

While it might seem like an obvious benefit to those who have been reading through, it’s still worth mentioning that outsourcing HR management improves efficiency. When HR management is conducted by a 3rd party, it allows teams to operate more effectively. If an employee has an issue and needs to meet with an HR manager, email tags and misaligned schedules can exacerbate whatever it is that they already need to be addressed. Fewer tasks equal more flexibility, and more flexibility means resolving situations more efficiently.

Cons

 

Perceived Loss of Control

Sometimes, organizations and leaders really feel that if they want something done right, they need to do it themselves. It’s difficult to qualify this as a real con of practicing outsourcing, as the issue lies with the company or individuals within it in most cases. In any event, it does happen when an organization is stuck in its ways. The road to improvement is not always a straight one, and while there is much room for speculation on the true cause of this, the fact that some feel a loss of control warrants noting in this article.

Availability

One of the more common, albeit, generally speaking, minor issues that companies and employees may come across when outsourcing their HR management, is a delay in availability. While the opposite is true in most cases – having to get ahold of a manager from a 3rd party organization can be a little more time-consuming than walking up to the office of someone in-house. In the grand scheme of things, this is a minor, although legitimate quip.

In the Final Analysis

While many things may have changed in our world since the onset of the pandemic, it appears that what organizations and employees want from their HR managers remains much the same. While many of the day-to-day details and procedures may have been amended, the idea that hiring a specialist to save money and improve efficiency is a good one seems to hold true.