5 Reasons to Outsource Your HR

By David Brown, General Manager

Outsourcing some or all of your HR functions makes sense for any growing organisations, and often can make sense for smaller businesses too.

What outsourcing looks like, when you should consider it and how you choose the best service for your needs are the kinds of questions that ‘persuade’ many businesses to keep filing outsourced HR into the ‘too hard basket.’

This guide takes you through those questions and more, and shows you how outsourcing HR can transform your business.

Why Outsource Your HR? Here’s 5 Great Reasons:

• Compliance
  This is at the top of the list for very good reasons. Since Australia's change of Federal Government in 2022, the pace of HR / Employee-Relations legislative changes has been unrelenting. While some of the changes such as pay secrecy, fixed term contracts, new bargaining arrangements etc. only touch some organisations, major changes around sexual harassment and psychosocial hazards will impact every organisation. All businesses need to get up to speed on their new obligations and by far the most time (and cost) effective way to do this is to call in an expert.  With fines in the hundreds of thousands of dollars and criminal penalties for wage theft and serious WHS breaches, it is vital to ensure you have the correct advice at the time you need it.
• Flexibility
  For many organisations, there simply isn’t the need for an HR person employed on their books either full or part time. Outsourcing your HR function to a great generalist HR service can give you the best of both worlds: an HR person who can get to know your business and one who is there as and when you need them, without the burden of employing someone.

• Expertise
  Human Resources, like all functions of an organisation, is a specialist area of skill and knowledge. While you can attempt to fill this gap with your general knowledge, there comes a point, just like with other functions such as IT, marketing, financial management, that your general knowledge will not be enough to keep your organisation safe and to ensure it thrives.  As your organisation grows ever more complex, outsourcing HR to a team with the broad range of expertise you need to manage it well as well as a specific HR skill set for a particular project, is a great way to ensure you have that expertise when it is most needed.

• Speed of Execution
  As we have seen, outsourced HR is the alternative to having someone in-house. A hidden value of outsourced HR over an in-house model is the speed at which things get done.   Consider this: you hire an in-house HR Manager with a view to building out your HR infrastructure, whether this is recruitment functionality, policies & procedures, a learning framework, or all of these things and more. They may have the skills and knowledge to build out your HR program, but they will also need the time.  Your outsourced HR provider will have the ability to tap into the ‘hive mind’ of expert colleagues and will have the tools and templates ready to go, meaning your organisation isn’t starting from scratch. This slashes the time taken to get things in place, meaning your HR program is up and running far more quickly with you seeing the return on your investment much sooner.

• Cost
  In some ways, this may seem the least intuitive benefit of HR outsourcing. After all, on a purely hourly rate basis, isn’t outsourced HR more expensive than hiring someone? The answer here is yes BUT …
  Think of the Point 4, speed of execution and how much time you save, which means both the cost is reduced and the benefit is realised much more quickly. Similarly, having the expertise on hand flexibly, when you need it rather than all of the time, allows you to target your spending to exactly where it is needed.

When to Outsource HR

Many of you will fondly remember the days when you were just starting out in a small business with a few employees. You knew everyone's name, their partners’ names, their kids’ and their pets' names. More importantly, you could tell when they arrived in the morning whether they were going to have a good day or a bad day and you could take it on yourself to manage them accordingly.

Then, as the business grows, you get to the point where relying on using your time and energy to spot issues and handle them personally becomes impossible, inefficient and risky.

This is the point at which you need a system, not only to handle the issue but to ensure everyone is aligned to your vision for the team and the business. In short: you need HR.

At this stage, you may not have the size and resources to have someone in-house to manage your HR and this is where an outsourced HR model can help.

What Kind of Outsourced HR Do I Need?

Ongoing outsourced HR support comes at three levels and a great outsourced HR services provider (such as Employee Matters) will provide all three levels of support:

1. Fixing problems. As we have seen, when team numbers grow, the number of problems grows with them. To manage this, many outsourced HR services will provide a ‘customer helpline’ approach to HR. You pay a monthly service fee and when an issue comes up you can call the helpline and speak with someone to help you with your issue.
2. Preventing problems. The service may go a little further and offer you a solution to help prevent the problem arising again, giving you peace of mind that this specific issue is now covered.
3. Driving value. This is the realm of great outsourced HR. A great service provider will do all of the above but their real focus is on how they can help you achieve success through your people. Focusing on your employees as key assets in your success and not simply liabilities to be fixed, they will assess your organisation and create a proactive plan to drive the profit, growth and sustainability of your business through your people. This is where the true value of outsourced HR kicks in.

Where to Get Started?

Don’t leave the benefits of great HR untapped. And don’t leave yourself exposed to risks like costly fines and court cases. Book a meeting with Employee Matters today to find the right kind of outsourced HR service for your organisation’s needs.