Human resources management is critical in many companies, creating a positive culture with high morale and low turnover. HR managers organize various people-focused tasks, such as recruiting and training new hires, paying employees, handling conflict, ensuring compliance, and terminating employee contracts.
Human resources professionals wear many hats, and smaller businesses may not have the time or resources to hire a dedicated in-house team. Instead, they look externally, outsourcing their HR functions to an expert partner.
By the end of the article, you’ll have a thorough understanding of what HR outsourcing is, what HR services you can outsource, and how it will help you succeed. With this knowledge, you’ll have an easier time finding a solution to your business’s HR needs.
What Are HR Outsourcing Services?
HR companies offer outsourcing services to companies with no internal HR team or those with understaffed or inexperienced human resources departments.
Outsourcing is an excellent solution for businesses that need support in specific areas while they manage mission-critical operations. It also helps companies reduce costs and increase efficiency. Some of the most frequently outsourced services include marketing, customer support, shipping, IT, and accounting.
Nearly all HR functions are suitable for outsourcing, but the ones you choose depend entirely on your business’ unique needs. You may only outsource specific HR functions — such as payroll or training — or you may delegate the full scope of HR management to an external company. Short-term HR outsourcing is also available when you only need assistance for a brief time or with a specific project. You can determine where an HR outsourcing company can assist by analyzing your current HR practices and finding improvement opportunities.
What HR Functions Can Your Business Outsource?
Before considering whether your business should outsource its HR functions, it’s helpful to understand which HR services are suitable for external assistance. Below are eight examples.
1. Strategy
Strategies are essential business tools that highlight long-term goals and the steps needed to get there. Throughout the entire process, a defined strategy will act as a guide to keep you on a steady path. While most business strategies focus on operations and growing sales, an HR strategy will outline an organization’s employee-related goals and core HR values. A comprehensive HR strategy aligns with business goals to help drive growth, support employees and provide the highest return on investment for HR services.
If your business currently has no HR strategy, you’ll see significant improvement through consulting with an HR outsourcing agency. HR strategy consulting is also helpful for companies with an existing roadmap, as these professionals bring an expert and unbiased view to make changes where needed. Their services are particularly crucial for businesses experiencing accelerated growth or substantial change.
An HR strategy consultant will work with you to:
- Understand your people-centric challenges and business goals.
- Review current employee skill sets and turnover rates.
- Audit your compensation and performance review process.
- Craft a mission statement to summarize your HR strategy.
2. Technology
Implementing HR technology is a game-changer for streamlining processes and improving efficiency. The HR department can work more effectively with a well-implemented human resources information system. From storing employee details and documentation to tracking performance, online recruitment and assisting cross-department collaboration, the benefits of an HRIS are abundant.
Choosing programs and systems for your business can be challenging, as multiple options have varying benefits and drawbacks. Hiring an external company for HRIS consulting can help you find the best system for your business and support all employees through the implementation process. A professional HRIS consultant does this by:
- Having an unbiased, vendor-agnostic approach to selecting an HRIS.
- Helping you evaluate the pros and cons and providing suggestions.
- Implementing chosen systems.
- Training and communicating with employees to help them adapt.
- Optimizing usage post-implementation for the best results.
3. Compensation Structures and Analytics
Many companies don’t have processes to offer fair and transparent pay for all team members. Outlining your business’ compensation structure will guide you on how to pay and promote employees. Plus, employees will be more satisfied with their compensation and feel comfortable progressing in their careers. These qualities are essential to attract, retain and motivate talented people.
Various structures are available for businesses to develop compensation strategies. If you aren’t sure which blueprint is best or how to implement it, outsourcing this function to an HR consulting firm will relieve this headache. Compensation specialists know the ins and outs of pay structures and use a data-driven approach to creating custom structures for all business types. They do this by:
- Conducting competitive analysis to understand your market.
- Surveying employees to uncover insights.
- Evaluating structure types to find an appropriate solution.
- Using insights and data to create a custom pay structure for your business.
- Ensuring pay equity and reducing inconsistencies or bias.
- Continually analyzing and adapting salary competitiveness.
4. Performance Management Systems
Performance management is the art of communicating responsibilities and expectations to employees and giving them the tools and motivation to achieve their goals. It fosters a positive and motivational work culture where employees strive to improve and reap rewards for their hard work. With consistent communication, businesses will see increased employee performance and the benefits that come from it.
Your business can outsource this function to consultants with the knowledge and tools to design or redesign performance management processes. With their experience and expertise, your business can implement effective systems that foster high performance. HR specialists improve employee performance by:
- Understanding your business and its overall goals.
- Aligning performance management strategies with organizational success.
- Creating and implementing performance management practices.
- Training leadership on communication, feedback and change management.
5. Training and Development
HR training programs effectively improve employee skill sets in areas outside their required duties. Training topics can include anti-harassment, leadership, teamwork, interviewing and even HR best practices for people in leadership positions with limited HR knowledge. With impactful courses and engaging training, your business’ leaders will have the confidence and skills to manage their teams, and you’ll foster a more inclusive and safer working environment.
HR outsourcing specialists provide training programs for businesses looking to invest in their people. When you outsource this function, you will receive years of combined knowledge from HR experts. They’ll increase training effectiveness and give you time to focus on other tasks. Professional HR consultants do this by:
- Discovering areas in your business where training would be beneficial.
- Outlining goals and choosing the appropriate courses.
- Teaching employees in a practical, engaging and creative way.
- Evaluating the success of training sessions.
6. Diversity and Inclusion
Everyone brings a unique perspective and skill set to your team, and companies must create a work culture that celebrates these differences. To do this, you’ll need to give all employees equal growth opportunities. As people become more aware of social responsibility, businesses must adapt and consider inclusivity and diversity in all areas to stay competitive and foster positive brand reputations.
Achieving an inclusive work culture takes hard work and dedication, but you don’t need to go through this alone. Working with an external HR expert who focuses on diversity, equity, inclusion and belonging can provide the tools and processes to achieve a more equitable workplace where employees feel welcome. An HR specialist can enhance diversity by:
- Redefining company values and goals.
- Conducting surveys and interviews to gather insights.
- Creating DEIB strategies and policies.
- Assisting leaders with inclusive communication.
- Training employees to improve DEIB on an individual level.
7. Policy Development and Compliance
Ensuring businesses comply with labor-related laws is a significant HR responsibility. Without compliant employee relations, your company will face legal consequences, and employees may feel mistreated. Some areas where HR specialists focus on meeting legal requirements include compensation, hiring, termination and workplace safety.
The HR department also assists with creating business documentation and internal policies. Having everything in written form helps make this information accessible to all employees and ensures compliance. Employee handbooks and policies are fundamental contributors to company culture. You must align them with your business values and strategy and use inclusive language throughout to resonate with a diverse team.
Instead of doing this internally, you can hire an external HR consultant to advise on compliance and policy development. They’ll bring years of experience and vast industry knowledge to take compliance stress off your hands. They’ll achieve this by:
- Conducting thorough compliance assessments.
- Creating or updating employee handbooks.
- Evaluating employee communication.
- Keeping detailed employee records.
- Creating safety programs and guidelines.
- Staying up to date with regulation changes.
8. Recruitment Processes
Acquiring and supporting a talented team is vital for any organization. However, selecting employees to fit specific roles and mesh well in the company’s culture is complex. It involves many lengthy tasks — including looking through applications and interviewing candidates — which are time-consuming.
Businesses increasingly choose to outsource recruitment. While you may still prefer screening applicants’ resumes and conducting interviews yourself, your business will save a lot of time and increase its chance of finding the ideal hire through an HR outsourcing firm.
Benefits of HR Outsourcing
HR outsourcing is incredibly beneficial for businesses, including those that handle their HR activities in-house and those that don’t have any HR practices. Because HR is pivotal for employee efficiency and morale, reaching out to professionals is helpful if you believe your business needs an HR boost. You wouldn’t be alone — nearly 80% of all companies outsource at least one of their HR functions.
Here are the advantages of partnering with a reputable HR outsourcing company.
- Expertise: In-house HR staff might not have the experience or training to handle the wide range of HR functions and daily issues that pop up. Outsourced human resources professionals can provide reliable advice informed by years of hands-on work in the field.
- Scalability: Your business will have an easier time growing and onboarding new employees with HR consultants’ guidance and the appropriate procedures, strategies and policies in place. You’ll also see more success thanks to their expertise.
- Extra time: HR specialists spend most of their workdays streamlining processes, resolving conflicts and identifying opportunities for improvement. They speed up workflow and take the burden of HR off employees, leaving them time to focus on their core competencies.
- Reduced risk: You can increase employee safety with an external HR consultant’s help. You’ll also safeguard your business from legal action and penalties, which can cost you money and reputation loss.
- Employee retention: Happy workers want to stay in jobs where they feel valued. HR outsourcing can help you find people that fit your business’ culture and create a supportive, positive work environment where employees thrive.
Start Your HR Outsourcing Journey With Exude Human Capital
Exude Human Capital is a boutique consulting firm founded in 2006 focused on the connectivity of HR, Diversity/Equity/Inclusion/Belonging, and Leadership Development. We provide solutions around HR outsourcing, compensation, strategic advisory, organizational and cultural assessments, DEIB advisory and training, coaching, and leadership development programs.
We believe there’s no “one-size-fits-all” approach to HR. When you partner with us for your HR needs, we’ll create a customized solution that fits your requirements and budget. Browse our list of case studies to see how we’ve helped businesses like yours overcome challenges in all areas of HR. To learn more about our services, browse our comprehensive list of solutions covering HR, DEIB, leadership development and training.
Contact us today by submitting a contact form on our site. We look forward to helping your business — and its people — grow and thrive.
