Outsourcing HR Options Should Be Considered

It seems as though my human resource experiences have gone full circle. This isn’t all bad as it as enabled me to witness first hand most of the options available to companies related to how they carry out their human resource function. Every option is viable depending on many variables including number of employees of the company, budget, industry and corporate philosophy or culture.
In my early career as the Director of a non-profit organization with over fifty employees and two hundred volunteers we had neither the headcount or the budget to support a full-time human resource professional so we “flew by the seat of our pants”. We did the best we could by our employees but knowing what I know now about the intracicies and laws relater to HR our exposure to risk was great. I therefore understand and appreciate what the small business owner must consider relative to dealing with employee issues.
I later joined a multi-national corporation serving in various capacities in the areas of human resource management. With over twelve hundred local employees and many thousands scattered throughout the world I realized that the human resource risks and needs were the same for the most part as we had in small business, simply on a much larger scope.
Most business leaders don’t wake up in the morning and think ”Today I am going to be the worst employer I can be”. Quite to the contrary, most desire to do the right thing realizing that their employees are often their greatest asset. So what are the options?
An unwritten rule of thumb is that companies should have one full-time human resource professional to support every one hundred employees. With the amount of compliance obligations and employee relations issues and services required of companies desiring to be best of class employers this equation makes sense. Companies that are going to employ a full or part-time HR professional should always seek a person with experience, education, training and perhaps certification. Many colleges and universities have Bachelor and Master level degrees in human resources and the HR professional society provides certification opportunities at three experience levels.
Another option to adding to a company’s headcount by employing a HR professional is outsourcing all or a part of the HR function. A recent report published by the Society of Human Resource Management stated that “A surge in human resource outsourcing by small businesses as well as large corporations is occurring as companies seek cost savings and gain increasing confidence in the abilities of outside firms to take over all or part of the HR function effectively.” The report noted that some experts estimate that within five years, half of all HR professionals will work through or with HR outsourcing firms as part of the vast empire of business process outsourcing.
Some companies are utilizing PEO’s or Professional Employer Organizations to take over their entire HR function and actually co-employee their employees. PEO’s have the capability to cover all of the administrative functional areas of HR including payroll, policies, insurance and reporting, plus are flexible to the changing staffing requirements of companies. Most PEO’s however lack the ability to personalize their services to a company’s culture and needs. PEO’s cost savings often come at the expense of companies losing much of the control over how their employees and managers receive services.
Another model enables companies to outsource all or any part of their HR function to a third-party HR Outsourcing / Consulting firm. This option provides greater flexibility for the company to serve their employee’s and manager’s HR requirements as their business needs and climate change. It also allows the business owner and senior management to focus on the core business strategies and placing the HR needs in the hands of trained professionals without adding costly headcount.
Every company with employees regardless of size will experience “people issue pains”. How companies deal with these issues depends on corporate culture, budget and the desire of management to be or not be involved in the daily requirement of human resources.