When you’re a business owner, you get used to wearing a lot of hats. One of those hats might be taking care of all the responsibilities that come with having employees, a.k.a. human resources. Or, it could be hiring (or thinking about hiring) an HR professional who can manage it for you. However you decided to proceed, handling HR in-house may seem both sensible and possible—outsourcing HR might be a better route. We want to help you determine if you should outsource your HR.
In reality, HR is a complicated, time-consuming component of business that calls for special know-how, especially around legal and compliance matters or when researching, selecting, and administering employee benefits, for example. It takes effort and skill to handle all the various tasks that are necessary to keep your workplace and employee relationships running smoothly. But when you manage HR in-house, putting in the time and focus required to do it well can prevent you and your staff from paying enough attention to the strategic opportunities and goals that can help your business grow.
As businesses everywhere seek to adapt to market changes and become more competitive, it requires an all-hands-on-deck approach. But this is difficult if you or your staff are stretched too thin or spending more time than you can afford to on certain tasks, including work that may seem urgent in the moment but not as important in the larger scheme of things.
To relieve some of the pressure, you can outsource a portion of your HR to a partner that has the right tools and experts on hand to manage a multitude of tasks effectively. If you’re still managing HR in-house and are ready for a better way, like outsourcing, here are five questions to ask yourself to help determine if you should outsource your HR:
1. How prepared are you or your staff to handle an HR crisis?
Few businesses can escape the occasional problem or crisis, but when it’s employee-related, it can be doubly challenging. Whether it’s a wage or hours problem, a workers’ comp situation, or an onboarding snafu, it takes time to sort through the details and make sure the crisis is handled appropriately. For you or your staff, this can require precious hours, access to the right information, and sometimes the need to delegate responsibility—none of which may be possible or easy.
2. How much HR risk can your business comfortably shoulder?
When you manage HR in-house, your business is completely responsible for the outcome. To protect your business from investigations, lawsuits, fines, and other liabilities that can have a negative impact, you or your staff need to ensure your business is up to date and compliant with all regulations. But according to a recent survey, 43% of small businesses have moderate, slight, or no confidence they can keep up with changing employment laws. If you’re in a similar boat, any internal mistake or oversight could result in serious consequences that you’ll also have to be responsible for mitigating or fixing.
3. Do you or your staff have comprehensive HR expertise?
Not everyone is an expert in all things—including the HR professionals you hire. You or your HR staff may be confident in tasks like payroll and benefits, but less so with legal concerns. Or you may have a lot of experience recruiting and hiring new employees, but fewer skills and resources when it comes to onboarding and training. If there are gaps in HR expertise, it can affect employee morale and retainment, result in compliance violations, or create and compound other workplace headaches, making it necessary to look elsewhere for additional help or answers.
4. How cost-effective is your current HR structure?
Taking on HR yourself as the business owner may not be feasible, but if you want to hire internally, it’s an investment you need to weigh carefully. And there’s another cost besides the financial one: time. HR requires a hefty time commitment just to complete the day-to-day responsibilities. Other factors like having a distributed team across different states can add complexity—which also means more time. In fact, fully distributed teams may become the new norm for many organizations and require a complete rewiring in how HR is done, including the need to be more cost-effective.
5. Finally, how strategic are you and your HR staff really able to be?
As a business owner, you want your business to grow and succeed. To do this, you need everyone on your team to move in the same direction and help drive toward those important goals and initiatives. This means making sure your HR staff has the time and focus to be strategic in their role(s) and not just consumed with the tactical or busy work. It also means having confidence that your business is well-equipped to handle all HR tasks and challenges so you can free up your own time to focus on what’s most valuable to the business. Without enough time and confidence, you’re less able to be strategic and may have to settle for achieving business goals at a slower pace.
Outsource HR to reduce risk and share the workload
Continuing to manage HR in-house may bring more worry and risk than it’s worth. And depending on your business priorities, it could even become an impediment to the future growth of your business.
Even if you have an internal HR team that functions well, or if you’ve had to bootstrap an HR team of one (you), handing off a portion of your HR tasks to a trusted partner is a forward-thinking and cost-effective way to:
- Alleviate and offload the administrative burden
- Consolidate and streamline everyday HR tasks
- Fill in information gaps with access to expert knowledge and advice
- Stay compliant and successfully navigate workplace challenges
- Care for, compensate, and develop your employees the way you want to
- Earn back time to spend on high-value, strategic work
To learn more about managing HR in-house vs. outsourcing it, and the considerations that are unique to both options, download the guide.