DIY or Call the Experts?

One hot HR topic right now involves how much HR infrastructure to build – or whether to build any infrastructure at all. Many small and mid-sized companies are choosing to outsource the entire HR function in hopes of concentrating on revenue generation. Should you?

Disclaimer – my company provides outsourced HR services. However, I’ll be the first to tell you that outsourcing is absolutely NOT the right answer for every company; and, even when it DOES make sense, considering carefully which outsourcing firm with whom to partner is essential.

Size matters. Companies between ten and fifty employees are perfect candidates for outsourcing the entire HR function while those over fifty employees may want to consider having a generalist in house and outsourcing additional support. Good services – whether in-house or external – come with a price; but the services (and billing) of an outsourcer are typically less expensive per employee per service and come with greater flexibility.

Want it your way? Remember the old Burger King commercials touting customized burgers? (I never understood why “holding the pickles” was so special!) The outsourcing model depends on economies of scale which implies lower levels of customization than might be available in house. For many businesses, this situation is perfect because there is little need for routine customization, but if this description doesn’t fit you, you will not be happy with most outsourced models. Of course, all HR outsourcers work to please their clients, and many firms offer levels of customized service, so if you think HR outsourcing might work for your company, be sure to interview several companies and ask specifically about how much individual attention you will receive.

Think local. Technology seduces us into thinking all businesses can be global, but your HR outsourcer needs to be nearby. My company handles global clients in its education and coaching practice areas, but our HR business is limited to companies with headquarters in South Carolina and, preferably, concentrated in the Upstate. Why? We established this limit through experience. We attempted to serve clients several states away and were reminded of something very important. People do business with, for and through the efforts of other people — who need communication. Not just an email, text or phone call, but face-to-face communication.

What are you solving for? If you are considering outsourcing your HR functions, clarify what you hope to gain? Do you want to reduce costs, improve efficiency, increase compliance, eliminate headaches or something else? Remember the old adage, “Faster, Better, Cheaper – Pick Any Two?” The same thing applies to HR outsourcing. There are trade-offs in any situation, so it is crucial that you and the potential outsourcer understand your hot buttons well before any agreements are signed.

Is HR Outsourcing in your future for 2015? One thing needs to be true – if you are going to DIY, be prepared for a lot of reading this year, starting with the next column!