In the effort to manage headcount and costs, many small but growing business owners attempt to manage the HR role on their own, only to discover they underestimated the scope and complexity of it and quickly become overwhelmed, or miss something that lands them in legal peril. Often, specific HR functions and regulatory compliance are overlooked because business owners simply don’t have the time or expertise to manage it properly. At some point a business makes the realization: I NEED HR HELP!
Do I have to hire a full time HR Manager or can I outsource the function?
You may not need to jump right to hiring a dedicated full-time or part-time HR person. Outsourcing your HR support may be a very sensible and appropriate option. But when does it make sense to outsource HR?
Here are a few things to consider when making the decision:
- Expense: Hiring a full time HR Manager and/or Department can be costly to a business by creating more overhead expenses, such as wages, taxes, workers compensation, benefits, etc. Most medium to large businesses have the financial resources to hire a Full Time HR Director/Manager, a recruiter and/or HR Generalist to manage their daily HR functions; however, most small companies do not. Smaller businesses typically do not need a full time HR department and may only require HR advice once or twice a month; whereas, medium to large businesses may require HR expertise on a daily basis. In addition, most smaller businesses prefer investing their time and resources into growing their business and selling their products and services, not managing and/or employing a full time HR function. This is when it makes sense to outsource HR! Outsourcing HR gives businesses access to HR experts who provide support and expertise as needed in all areas of HR, including recruiting, employee relations, policies and procedures development, Labor Law compliance and more. By outsourcing, you get the HR expertise of an experienced HR Manager without the added expense of employing one.
- Experience/Expertise: In the complex world of HR, state and federal employment labor laws are constantly changing, which can be extremely time consuming for a business owner to keep up with. Labor Law Compliance can be a huge risk, legally and financially, if it is not being managed properly. By hiring an HR Consultant, a business owner can focus on managing the business while the HR Consultant focuses on the HR operations and state and federal employment law compliance. It is a great business decision to leave the HR complexity to the experts. If you need medical advice, you ask a doctor…if you need HR advice, you ask an HR expert!
- Time: Let’s face it, managing the day to day HR operations of a business is time consuming. Businesses who attempt to manage HR functions internally tend to find that productivity and revenue is greatly reduced since HR requires so much administrative focus. Additionally, with the constantly changing state and federal employment law regulations and changes within our administration, many business owners do not have the time to keep up with and/or consider the impact these changes may have on their business, which can result in exposure to risk and liability for non-compliance. By outsourcing HR, businesses can rely on the expertise of the HR professionals to research and determine how new laws and regulations will affect their businesses, which in turn allows the business owners more time to focus on their business’ financial success.
A properly managed HR function not only manages employment and labor law compliance, policy & procedure development and enforcement, career succession planning, and recruiting, but is also a pivotal strategic partner to the ownership in ensuring that HR practices and the objectives of the business align. For small to mid-size businesses, this focus can be too comprehensive and complex to develop and manage internally or without help. Maximizing the option to outsource at this point helps to reduce administrative expenses while productivity and revenue are increased. Overall, outsourcing HR can prove to be a wise business decision to help the business grow.