Why You Should Consider Outsourcing HR
Regardless of the size or stage of company, business leaders should give serious consideration to outsourcing HR.
This seems like an odd statement for me to be making, having spent the vast majority of my career in a corporate environment, but there are some very good business reasons for giving this approach serious consideration.
Whether you are a small company with no HR presence or a more mature organization with a small team of HR resources, working with a highly valued HR outsourcing company can make great financial sense for you – and ensure you are doing all the right things for your employees.
Consider what outsourcing HR can offer your organization:
- Positive financial impact by scaling up and down the HR team to align with your shifting business demands.
- Flexible resources to add missing skills and relevant corporate experiences, and ensure you are building strategic or tactical bench strength to complement your internal team – in the right amount and when it is needed most.
- Embedded recruitment support to offer an affordable and internal recruitment effort that builds your brand as an employer and develops your own talent pool over the long term
How are you managing HR your needs as your company grows?
As your company grows and everyone gets fully consumed, who takes the time to step back and plan for growth when you are so busy trying to solve today’s problems and make the numbers for the quarter? It is important to ensure that you understand the gaps you have in your talent pool.
Are there specific technologies or industry expertise required to develop your product roadmap or a new offering to your customers? Do you have the right leaders in place to take the company to the next level? All important questions, none of which can be ignored if you are going to be successful.
But where to start?
You don’t have time to take this on, as you have 17 other things that need your immediate attention, yet you can’t afford to wait any longer to bring the required talent into your organization. If you have a single HR resource on staff, their limited capacity and functional sweet spot will leave gaps when you face high volume activities or new business challenges requiring different skills or experience.
In addition, your internal HR team will have multiple HR priorities to deliver on: onboarding of new employees; developing salary ranges; researching and implementing benefit programs; mapping out a performance management process; ensuring you are legally compliant; supporting training and development initiatives, etc.
Why headhunters aren’t the solution
The solution for any company is rarely to add permanent staff for each new business challenge that arises. To date, the only option companies have felt they had was to turn to external headhunters – an approach that has many significant limitations – the least of which is the financial impact of facing a fee/hire of 20-25% of starting salary.
More significant challenges of the headhunter approach are:
- Very limited understanding of your business, vision, corporate culture, work environment and certainly nothing comparable to what your internal team knows.
- Understanding the recruitment need – the role, fit with a team, additional soft skills to align with culture.
- The headhunter business model is focused on landing a hire quickly and with the least amount of effort. The resulting experience is you will receive LOTS of candidates quickly with the hopes of a quick hire and less attention to finding the very best new employee for the team and the company. Companies should not be fooled – hiring well takes deliberate effort, focused attention and time.
- Finally, the headhunter works to increase their brand and build their own pool of potential candidates, which they hold onto and ‘own’ for 12 months. As a result, the opportunity to build presence and awareness around who you are as an employer and reaching future talent pools is lost.
How should HR resources change as a company grows?
As companies grow, the people challenges become increasingly more prevalent and complicated. If you have an internal HR resource, this will naturally address a part of what your business needs. With more complexity, increased HR challenges and the demands of growth or change, however, the coverage your internal team can address will become more and more narrow, exposing the company to wider gaps, increased risk and weaker business performance. Human Resources must be a function that enables business.
A team that can only address parts of the business (either because there is a single/small HR team or no HR team) and cannot respond to the changing business demands and priorities can become disconnected from driving business results. Not a situation any organization can afford nor wants.
Why does outsourcing HR work?
Outsourcing HR can provide businesses with end-to-end specialized HR skills, knowledge and expertise when and where you need it. Paying only for what is needed, when you need it, allows organizations to act nimbly and strategically to drive overall business performance.
Embedding key competencies and extra hands to your team builds the skills, knowledge and expertise that can be leveraged over the long term in a sustainable and affordable way.
Finally, the outsourced HR approach allows your team to focus their time and energy to do what you hired them to do, while at the same time, ensuring that you are giving the right level of attention to your single most important investment – your people.
The Business Sherpa Group provides Human Resources support to small and mid-size organizations who cannot justify a full-time hire, or who need added bench strength to their existing team. Learn more about our Human Resources practice.
About the Author
Sherri Coxon is an Executive Leader and Managing Director of Human Resources for the Business Sherpa Group. She has over 20 years of hands-on HR experience serving small to medium sized companies in multiple sectors, and over 13 years in a Senior Manager capacity. Sherri’s experience inside organizations provides her with an appreciation for the impact HR initiatives have on organization effectiveness as well as the need for cost effective programs in support of business results.