Should you outsource?
Human resources is a specialist discipline that requires expert knowledge and broad experience to implement successfully. It is one of those corporate departments that goes unnoticed when performing well, but causes havoc when it gets things wrong. Furthermore, HR is not one unified function. Recruitment and selection require a very different skill set to that needed for mediation, labour law compliance or performance and remuneration reviews.
Does your HR team have what it takes? Do you have specialists in all aspects of HR in the team or are generalists frantically trying to be experts in all niche areas? Do you have HR staff who are excellent recruitment and selection operatives designing performance management systems and determining remuneration package options for senior executives? Maybe it’s time to think about outsourcing.
Why you might consider it
Outsourcing does not mean handing over control to outsiders. It means bringing in the expertise you need, when you need it, without carrying the cost permanently. Outsourcing allows you to engage the expertise you need without having to invest in the training and development of employees who may only stay a few years. It gives you access to experts whose job it is to stay abreast of legislation and market movements, so that you can stay ahead of the curve. It is extremely difficult for all but the largest of companies to do this in-house. Labour law is complex and trends change rapidly. Most organisations can only hope to match the median in their own industry. Outsourcing to dedicated specialists can give you a distinct competitive advantage.
Functions you might consider outsourcing
Outsourcing is not an “all or nothing” proposition. You can choose to sub-contract certain aspects of your HR function and keep others in-house. You may dislike conducting recruitment searches, and choose to hand it over in its entirety to an agency. Or you may prefer to manage recruitment and selection internally, for reasons of corporate culture, continuity, or because you have a great selection team with strong working relationships with line managers. But you may need support with other aspects of the HR function. You may need to develop your capacity in performance management, or remuneration policy and review. The beauty of outsourcing is that you are in control. You can retain the elements of your human resources functionality where you have capacity and strength, and outsource the areas where you need help. This support can be temporary, while you build your own capacity, or it can be a strategic decision that is long-term. For example, you may decide, for reasons of objectivity and transparency, to permanently outsource your remuneration function.
Outsourcing HR functions can offer a number of advantages. Let’s look at them one by one.
It can be more cost-effective to outsource rather than invest in the resource in-house. Particularly for very specialist activities that only take place at set intervals, the cost of maintaining the skills required in the permanent workforce may be high. For this reason, in some organisations these expert tasks are carried out by generalists, resulting in a lower-quality output than desired. Outsourcing gives you access to expertise on demand, allowing you to pay for results.
Efficiency and technology
There are efficiency gains with outsourcing too. A dedicated HR service provider has the latest technology available and can streamline important functions such as payroll, benefit administration and compliance management. With administrative functions like these outsourced, your in-house HR team can spend more time on the “human” aspect of their job – improving the efficiency and effectiveness of the workforce.
South African labour law is complex and getting it wrong can not only be costly in financial terms, it can damage a company’s reputation. No one wants a high-profile CCMA case. However diligently your HR department keeps abreast of both legal and market developments, it is likely that the HR service provider has committed more resource to this pursuit. The outsourced specialist can scan your environment and identify risks and threats and help you mitigate them before they become live issues. They can also audit your company policies and procedures to ensure the organisation and your employees’ best interests are protected.
HR staff have a tough job to do. While they are sometimes a shoulder to cry on for a distressed employee, at other times they must enforce policies that render them highly unpopular. They hold confidential information on all employees, so it’s inadvisable for them to socialise outside of their own department. Yet inevitably they will have friends in other parts of the organisation. And this can make certain sensitive activities, such as remuneration reviews or assessments, difficult. When these tasks are outsourced, these issues fall away. A third party is fully independent and has an arms-length relationship with employees and managers, and conducts the review on the basis of market benchmarks and performance. Personalities and relationships are irrelevant and the distance and independence of the service provider ensure a fair and transparent process.
Access to training
It is universally accepted that training is essential to employee development and organisational growth. In areas of regulatory oversight, training ensures companies remain compliant with all relevant legislation and guidelines. But training is expensive, and the training budget must be fairly allocated across all departments. An HR service provider can afford to devote considerable resource to training because expertise is what they sell. They scrutinise every change in legislation so you don’t have to. When you outsource an HR function you are assured of the very latest knowledge and insight.
Outsourcing may not suit every organisation. Some corporate cultures encourage a “family” atmosphere and may view the sub-contracting of human resources as disloyal to employees. Other organisations prefer to keep tight control over all functions, with direct line reporting of all activities right up to the top. Those organisations may fear a loss of control if critical roles are outsourced. Or they may fear leakage of confidential data.
While these concerns are understandable, they are unfounded. A reputable HR service provider, such as EOH Human Capital Solutions, works to the highest standards of professionalism and confidentiality with every client. They will work with you to understand your requirements before undertaking any assignment, large or small, and will respect your organisational modus operandi rather than imposing a one-size-fits-all solution.
How EOH HCS can help
EOH Human Capital Solutions are experts in HR strategy, remuneration policy and modelling, assessments, among others. If you would like to know how outsourcing to EOH Human Capital Solutions can save you money and help you grow your business, contact us on 012 940 6300 or firstname.lastname@example.org.