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HR: in-house or out-sourced?
Should you rely on your company’s in-house people management team for all your employment-related needs, or should this essential function be tended to outside of your business?
“In my experience, businesses with fewer than 50 employees … have a manager or finance director who dabbles in HR because they have some relevant experience in their dim and distant past which seemingly qualifies them to deal with all the people issues that arise,” is the withering opinion of one insider.
‘People issues’ are a major headache for many organizations, so wouldn’t it make sense to out-source the handling and problem-solving of those issues to people management specialists?
Here we offer five good reasons why you should seriously think about out-sourcing your HR functions.
1. Your time is freed up for focus on your core competencies
As a non-direct revenue-generating activity, HR is notorious for eating up organizations’ time and energies. Running an efficient and innovative HR department in-house is a very big ‘ask’ in terms of company resources, training and innovation.
Wouldn’t it make sense to concentrate on what you do best – your core competencies that improve your business operations and therefore your profits – by out-sourcing your HR and people management functions to the experts?
2. Your recruitment and retention improve
The strategic garnering, retention and nurturing of top-class talent – people being, after all, the life blood of your organization – is not only specialized work, it’s an art.
The right out-sourced HR partner will be an extension to your management team, ensuring you have the right people doing the right job to the right standard whilst also keeping you focussed on the future so that your investment in talent (staff) is aligned to your company’s goals and values.
Wouldn’t you rather entrust those processes to people who live, think and breathe people management, and whose aim is to help their clients improve their business and strategic advantage through staff performance?
3. You save money
Effective in-house HR needs money, from recruitment, salaries and office space to systems, training and development. Many businesses calculate the expense, in terms of both costs and time, and decide from the start that it’s just not worth it, choosing instead the out-sourcing route.
Out-sourcing your personnel management allows you to fix your budget directly linked to the level of services you require, plus the right outsourced provider will be looking for ways to minimise costs in your business and increase profits.
4. Compliance improves
The world of HR is infamous for being criss-crossed with innumerable regulations, with the threat of litigation ever present around employment issues even if you follow all the rules as best you can.
In taking on an out-sourced people management specialist, compliance and litigation headaches become theirs to sort out.
Out-sourcing your HR lets them take the strain of complex procedures and difficult meetings. It’s their job - and they’ll know what they’re doing!
5. You access the latest thinking, tools and technology
If you shop around and choose an HR team that’s innovative and well versed in the latest technologies in the field, they’ll know exactly how to use these latest tools in the service of better people management for your organization.
These technologies include - but are certainly not limited to - analytics, virtual workforce strategy and management, cloud technology, social media and big data mining. These are probably tools that in-house HR colleagues would be familiar with, but not experts in.
Post Script: a good ‘fit’ is essential
Even if these five reasons make perfect sense, always remember that there’s an important element of match-making here too.
Any out-sourced HR advisors would need to be a good cultural ‘fit’ with your ethos, and it’s crucial to shop around for any external provider.
For more information around how P3PM could help your organization, contact us!
 ‘Knowing When to Outsource Your Small Business’s HR’, The Guardian, 6th November 2012.
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