Should I Outsource my HR or not?

January 17, 2024

Should I outsource my HR or not?, this is a question we are asked by so many, in our latest news we look at the positives of HR Outsourcing, what you should look for and what to avoid.

Anything in HR can be outsourced, this can be anything from HR Advice and Guidance, administration, strategic planning, training and outsourcing the whole HR function. HR Outsourcing can deliver tangible benefits to you; this can be achieved by freeing up your and others’ time, which can then be spent developing your business performance and driving your growth. There are many advantages of HR Outsourcing, once you have carefully ‘chosen’ your provider you should see:

An overall reduction in costs
An increased efficiency
Improved access to HR professionals (not available internally or at a level required)
Increased flexibility and speed of response
An improvement in the reduction of risk element
Access to free HR resources to operate more strategically

Who should I choose and why?

Above we have touched on the word ‘chosen’, it is imperative that your choice is made wisely. It is safe to say there are hundreds upon hundreds of outsourced HR providers, most of which proclaim to offer much the same, our sincere advice is to shop around, by doing so you should find the provider that is right for your business, needs, culture, growth strategy and meets your budget.

let’s take a closer look at the do’s and the don’ts when making your choice in provider below:

Don’t reinvent the wheel

If you are already doing something really well then don’t outsource it, or that element, it may be you have a payroll provider or use software to track time and attendance, if that’s the case then don’t outsource that element. Why? Well, in essence, your new provider will only need to subsequently offer another solution, this will be at a cost and ultimately it may not be the most suitable from your perspective either.

Always worth remembering, that outsourcing your HR does not mean you are absolved of good people management practice, nor does it mean you relinquish all responsibility for the provision of HR, as an Employer you still have a duty to comply.

Don’t’ agree to unfavourable contractual terms

It really is not unusual for outsourced providers’ service agreements (contracts) to be 5-10 years in length, it is advisable prior to entering into any agreement (contract) that you have a clear and concise overview not just of your internal business current and future business strategy and potential changing business, including any risk and also that you are more than happy with your chosen provider; this will help you avoid being tied into unfavourable contractual agreements.

Find the right fit for you

This is top of our list, and the one when we outsource any of our functions, you will find with so many providers it can be hard to choose, you should choose based on your personal preference, this means can you work with them?, are they aligned to your own goals?, it may be they are a call centre and that is not your preferred choice, if so look for a provider who offers a 1-1 service, discuss internal service levels and how they are achieved, many providers advertise they are open at times and days when they are not, let’s say you don’t operate 9-5 Monday – Friday, and you have a HR disaster, in the evening or weekend, can it really wait until Monday morning…

Establish the size and qualifications/experience of the team, it may be they cannot handle your requirements.

Do they cover all the elements you need, for example; maybe you have an ongoing requirement to TUPE, site visits, or perhaps restructures leading to redundancies, it is advisable to investigate the provider’s knowledge and experience in the field and also any additional fees involved, many hide these fees and once you need access to them your agreed low payment can easily start to escalate.

Location, Location, location

You may want to consider the location of your new provider, many advertise they are in your area but where are they actually based? this may not be an immediate issue, but maybe you need a site visit, in that case, how much will that cost you?

Worth remembering, that location can also be a deal breaker in some cases there may be a loss of local knowledge, processes, culture, language, and legislation.

Templates or Bespoke

Be clear from the outset what your needs are, many outsourced providers will issue template documents, this would include, handbooks, and contracts of employment, and should you require correspondence for your Employees that would be the same, is this something that you want, templates will lead to your internal processes being repeated by yourself and not in line with your preferences.

Should you have the option for bespoke documents, we really do advise you to choose this option but ask for evidence of what they mean by bespoke or templates, believe me, we see so many of them and they really are not bespoke…clarifying your position and your requirements is a priority, ultimately a provider who can really provide you with a ‘true bespoke service’ in the long term will be far more cost-effective and free up your/HR time.

Avoid cheap deals

You will have heard this before many, many times, ‘you get what you pay for’ it really is true though. Our suggestion is you check out what the provider/proposal is offering you, and that you look out for hidden fees and costs, these will be elements such as extras for site visits, bespoke documents, calls, and email responses out of hours or over your cap and extra services.

If a deal looks too good to be true it often is, it can cost more in the long run. On a final note here, if the provider doesn’t send you a fully outlined proposal then question why?.

The power of true testimonials

Whilst many providers have reviews/testimonials in some cases these leave a lot to be desired if you do some digging you may find the connection and it may not be a true client relationship, many work on referrals, are part of business networking and pass reviews this way. We suggest you ask to speak directly to a current client, that way you will find out the real truth behind the provider and whether they will be a good fit for you.

Try before you buy

If you are hesitant, why not try out the new provider for a period of time, if they have a Pay&Go service you could access this for documents or advice and guidance, that way you can test them out first.

Should I have an agreement with my new provider?

The operation of any HR outsourcing arrangement should be governed by a service level agreement (the contract); it defines the required standards of performance by both parties and should be inclusive of penalties for non-compliance, it is a crucial document, they should be commonplace for a HRO, I would be very wary if you were not issued one, it maybe you need to negotiate this to any of the risks we have covered.

So, should you Outsource, and to who?

Ultimately, we would say yes in most cases, the choice really is yours and what works for your business, by following the advice above then we feel you should not go far wrong, it is the same in many industries that outsource, choosing wisely is the most important piece of advice we can provide, we know that we that some prospective clients do not choose to work with us, we understand that we may not be the right option for them, we know some great HRO’s and some that leave a lot to be desired, we are always more than happy to recommend alternative HRO’s who we feel would offer alternative packages, or closer meet their budget.

How can we help you?

At HR and You Ltd we offer HR Outsourcing on a personal level and can do this in many ways, you can speak to us at any time by contacting us on: 0333 006949 or email us at [email protected]

We offer a wide range of Retained HR Support packages, these offer you the freedom and peace of mind that your HR and Employment law needs are taken care of, whether you have in-house HR or not we really do have you covered 365/24 7 days of the week, with truly bespoke documents along the way.

Disclaimer

This article contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.

HR and You Ltd, owns the copyright in this document. You must not use this document in any way that infringes the intellectual property rights in it. You may download and print this document which you may then use, for your own internal non-profit making purposes. However, under no circumstances are you permitted to use, copy, or reproduce this document with a view to profit or gain. In addition, you must not sell or distribute this document to third parties who are not members of your organisation, whether for monetary payment or otherwise. This document is intended to serve as general guidance only and does not constitute legal advice. The application and impact of laws can vary widely based on the specific facts involved. This document should not be used as a substitute for consultation with professional legal or other competent advisers. Before making any decision or taking any action, you should consult a HR and You Ltd Consultant or a member of our legal team. In no circumstances will HR and You Ltd, or any company within HR and You Ltd be liable for any decision made or action taken in reliance on the information contained within this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.