Growing organizations will inevitably come to a point where they must decide how to scale their HR capacity. Circumstances, budget, and long-term business objectives all play a role in the decision-making process for the leadership team.
Perhaps there is a recently vacated role that needs immediate filling, or you need a senior HR practitioner to help create and support a solid people and culture strategy as you build your team, but you do not yet have the financial resources to bring someone with that level of expertise on full-time. Outsourcing part or all your HR function might be the best path forward, but how do you know if this decision is right for your organization?
I’ve reflected often on this question, both as a practitioner working in a corporate setting and now leading a team of HR consultants at Stratford Group. Having sat on both sides of the table and having supported various organizations, I can say that there are some important elements to consider as a growing business before making this impactful decision.
Let’s explore some of these considerations to help you and your organization make an educated decision on what HR outsourcing path might be right for you.
The first question to ask yourself is, “What type of HR help is it that I need?” There are two different types and deciding which type is right for you comes to down whether you are looking for extra bench strength to add to your delivery capacity on a project or if you are looking for temporary support to fill a gap left by an unexpected departure. Understanding the difference will ensure that you are matching the correct outsourcing option that best fits your current and future needs.
The first option is contracting for provisional or temporary HR resourcing to support your HR outcomes. Simply put, this would be to fill a temporary resourcing gap in your HR capacity with an external HR expert who can hit the ground running which will result in an immediate value add to deliver on project work or to fill a position left vacant.
Someone has left your HR Team – we need to close that knowledge gap ‘’tout de suite!”
It’s a common situation, that many of us have experienced, where someone from our team has resigned or left temporarily, often unexpectedly. Obviously, we all wish that person the best of luck in their new career endeavours or prompt recovery in the case of a temporary leave but inevitably, we start thinking, “Who will take on the additional responsibilities and work while someone else is found to replace them?’’
In this situation, reaching out to a reputable consulting firm that has access to a pool of HR experts to cover the period of transition either with a consultant or one of their employees is recommended.
The advantage of this approach is that you can immediately keep your operational momentum and productivity without having to put the work on hold while you go through a recruitment and ramp up process to find a replacement.
Additional project work – call in reinforcements!
Have you ever been faced with a situation where, after an executive retreat, your boss walks into your office and says to you, ‘’I want to give you a heads up that the executive team has identified a number of enhancements/ modernization/ efficiency/upscaling / (i.e., insert any buzz word of choice that we have heard before). And we need additional projects/work to be delivered by HR to meet our strategic plan.’’
Understanding that your HR team is already at full capacity to deliver on ongoing business, this is the perfect scenario to call in reinforcements. In this situation, bringing in additional temporary resources to work in collaboration with your HR team to either fill a resource gap or provide additional bandwidth with HR expertise is recommended.
From a funding perspective, typically, with additional projects and work, comes additional budget, which would allow you to absorb the related outsourcing costs. In addition, your internal HR team members will benefit from the learning opportunity and outside perspective external HR experts bring to the table as well as continue to focus on ‘’keeping the wheels on the bus’’ making this a win-win situation.
The second option is to outsource your HR department, either fully or partly, with one or a combination of HR services. Depending on the size of your organization, this option can be more cost effective and add more value depending on the internal capabilities to deliver on increasing People & Culture needs. A key decision point is how big is your organization…
It’s time to invest in HR!
As organizations grow from being a start-up to having a few employees (~10-50), People & Culture considerations become a focal point used to attract, engage, and retain talent, especially in this employee driven market. As your organization makes this transition, consider outsourcing your HR needs to a team of experts is the recommended option.
Typically, this option is best suited for smaller organizations, looking to scale, who would not yet have a dedicated HR person on staff. Hiring more seasoned HR resources might still be outside of their budget. In this scenario, outsourcing your HR department can be a cost-effective solution, as for the same investment as having a full time junior or mid-career HR generalist, you get the benefit of having access to a full team of HR experts that can work both at an operational and strategic level.
A new perspective
For organizations that have 50 + employees, they typically have a dedicated HR person within or perhaps an entire HR department. That said, these organizations have limited internal bandwidth or capabilities to deliver specialized services outside daily operations and limited insight into HR best practices.
This can include Recruitment, Compensation, Business Partnership services, Employee Rewards and Recognition, Performance Management, Leadership Development, etc. In this scenario, outsourcing part of your HR functions can increase your team’s HR expertise and delivery capacity to support evolving business needs.
Now there are many combinations of options to meet your People and Culture needs, and in my opinion, speaking with reputable HR Consulting firms that offer HR Outsourcing services is recommended.
I hope this insight will help you reflect on some key considerations to make the decision on outsourcing all or in part of your HR function.
Pierre is Stratford’s practice leader. He is a results-driven with more than 25 years of progressive HR experience. Pierre brings a strong background in helping organizations effectively use human capital to maximize business outcomes. As a trusted HR leader, he has successfully advised clients in managing human resource requirements of rapidly evolving organizations through a significant change where being innovative, nimble, and most importantly responsive to growing business needs is key in delivering value.