Don’t Rush To Outsource HR

Outsourcing HR is a dangerous move. That’s the call we’re happy to make, it’s not something that a company should look at lightly.

There’s a business case for it, sure. Businesses make a call to outsource HR functions like payroll administration, superannuation, employee benefits administration and onboarding to cut costs, reduce headcount, avoid friction and ultimately save money in the long run. That’s the thinking, that’s the plan, and it’s not always going to work out like that.

The truth is, that we’re talking about a function that impacts and interacts with real human people. And when that function becomes outsourced, its ability to actually help, hold authority or make a difference to the lives and work of key staff is severely diminished. It’s almost wiped out.

“It is hard to improve performance and drive major change unless you have an on-site presence. Where HR can have a significant positive impact on organisational culture, values and performance, there is a strong argument for keeping its ‘strategic’ functions in-house. Where this opportunity does not exist or where the HR function lacks credibility, the possibility of outsourcing most or all of its activities should be subject to a cost/benefit analysis.” – WorkPlaceInfo

When staff have a serious issue that has to be addressed, when the issue is going to relate to their personal interactions at work, to tough questions about retention and progress, or even harassment and responses to it, there can’t be an impersonal and outsourced response to those concerns. That undermines the culture of the entire business, and damages the internal reputation of the management.

While there are circumstances where it can work, it’s incredibly risky.

Outsourcing itself is a bigger question than any one piece of content can cover, or discuss, or reach a real dividing line on. But when you’re considering it in order to achieve goals around saving money and saving time, there’s always going to be other options.

One of the best ways to do this is always to make an investment into systems and processes that can go towards that goal.

If you can find a way to automate as much as possible, and establish clear flows that actually make sense and are easy to follow, optimise and replicate, that’s going a fair way towards operational streamlining for your HR efforts. It can almost be shocking sometimes to see how many companies don’t have clear processes in any department, let alone in a part of the company that actually really needs them in order to be compliant with policy.

The good news is, these can actually cut down on the human capital, cut down on the investment of time, and ultimately cut down on expenditure and waste.

Building out a use-case for an effective system and working to integrate it into the way your company works will cover this space, and an HRIS is going to play a good portion of that game. It’s one of the reasons we’ve invested in Flare, and we’ll always try and persuade you to invest in using it, but in the bigger picture, just implementing a functioning HRIS at some level is a big and important step.

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