Pros and cons of outsourcing HR
While some companies count on an in-house human resources department to manage the recruitment process, coordinate employee training and handle payroll tasks, some businesses elect to outsource HR to save on costs. Companies that do not have the resources to hire an HR manager can turn to an outsourcing company that manages several HR administrative tasks and offers private personnel management. There are several pros and cons to outsourcing HR. An organization considering this change first will need to determine which tasks and duties the outsourcing firm needs to be entrusted with.
What HR outsourcing companies offer
Many outsourcing HR firms can offer a complete suite of services as a package, while others offer a la carte services on a contract basis so you can select only those services you need at a given time. An HR outsourcing company can help with:
- New hire training and new employee training
- Analyzing and assessing staff requirements in each department
- Tracking department goals and monitoring resources available
- Providing manager training
- Overseeing benefits and payroll duties
- Conducting seminars and training workshops to boost employee morale
Evaluating the pros and cons to outsourcing HR can help determine if and when a company should proceed with this type of initiative.
Outsourcing HR or Not?
There are several pros and cons to outsourcing HR processes for both small and large businesses. Contracting out the specialized tasks and projects associated with recruitment, hiring and benefits management can reduce the workload of department managers and improve the quality of employees within the organization. By leaving these important duties in the hands of a professional, you can focus your time and resources on other essential business functions.
Additional HR outsourcing benefits include:
- Reducing the costs associated with high employee turnover
- Assuring compliance with all governmental rules and regulations
- Managing worker's compensation and legal matters without consulting an attorney
- Improving productivity by relieving managers of hiring, recruiting, and employee management tasks
- Consistent reporting throughout your organization
- Reducing the workload for administrative staff members who may be juggling payroll, benefits administration and new hire paperwork
While these HR outsourcing advantages are significant, there also are some drawbacks. When evaluating the pros and cons to outsourcing HR functions, some disadvantages include:
- Less control over how tasks are completed. An HR firm will have complete control over the processes and task management of each responsibility that may not, in some cases, match your current processes.
- Open access to sensitive information. Confidential information may leak or become lost during communications with an outsourcing partner.
- Reduced level of quality communication between employees and their managers. Having a third party intervene for employee or personnel issues can have a negative impact on the company's culture and employee morale.