In my last Insight, I explained what HR outsourcing is and debunked some common misconceptions.
If you’re an employer who is considering HR outsourcing for your company or organization, here are the next steps you should take:
Whoever’s in charge of making the decision should get together and think about:
- What criteria are we going to use to make the decision to outsource?
- What are the pluses and minuses of outsourcing?
- What do we really want from our HR department? Is what we are doing now going to move us forward?
- What kind of impact do we want HR outsourcing to have for us?
- Does how we handle HR now contribute to our core competencies and company vision for growth and profit?
- Do we know what else is available; do we know what we don’t know?
The decision-makers need to look at and define any problems they’re having internally that have brought them to considering HR outsourcing. They need to look at internal costs—not just the cost of doing an employee’s payroll, but what costs are associated with their internal HR package, all HR functions including medical plans, 401(k), vacation/sick time, etc.
Once they’ve determined their true costs, they need to look at where they want to go in the future:
- How are they going to define their growth?
- What are the opportunity costs? This would include the saving of senior level resources to refocus on the core business.
- What do they want to accomplish in the next 5 years?
- How are they going to get where they want to go? (With the people they already have or by hiring new people, etc.)
So the decision-makers really need to look at their people quotient and make some decisions regarding how they want to move forward.
Some Other Things to Consider
When it comes to HR outsourcing, I believe companies need to do what is going to be a strategic decision for them long-term.
It is a common misconception that outsourcing is giving up control. In truth you can gain back control of the time you are now focusing on transactional HR functions. When you contract a Professional Employer Organization (PEO), there will be someone taking care of some of the administrative business you’re used to taking care of.
For example, if you’re a small company, what you’re probably looking for is some way to find more time in your day; there are a number of reasons why outsourcing is very, very good for this. Outsourcing would allow you to contract a PEO and reduce your HR burden, which will then allow you more time to focus on your business.
Once a company has an idea of where they want to go, they’ll be able to determine if HR outsourcing is right for them or not.
If the decision is made to go with HR outsourcing, the company’s next step would be to contact a Professional Employer Organization.