What HR Functions Can Be Outsourced?

Human Resources (HR) processes encompass far more than resolving workplace conflict between employees or handling employee contracts. HR functions include administration, compensation, recruitment, and much more. By outsourcing some of these functions, you’ll free up your valuable time that you can then reallocate to other HR duties.

What Are HR Functions?

HR roles incorporate various functions and duties within a corporation. Below are 12 of the main HR functions:

• Human Resource Planning
• Recruitment
• Performance Management
• Career Planning
• Learning and Development
• Health and Safety
• Administrative Duties
• Rewards
• Function Evaluation
• Employee Communication and Participation
• Personal Wellbeing
• Industrial Relations

Outsourcing HR Functions

Outsourcing of HR functions is not only popular but can hold many benefits, no matter the size of your organization. It improves efficiency, ensures compliance, helps save money, and gives you access to a greater talent pool to choose from.

What Is HR Outsourcing?

HR outsourcing involves an agreement between an external HR services provider and a third party, whereby services are exchanged for remuneration.

Of course, there are both pros and cons of outsourcing hr functions. And both should be considered before deciding whether outsourcing of HR functions is suitable for your business. 

What HR Functions Can Be Outsourced?

Believe it or not, quite a few HR functions can easily be outsourced. Whether you’re looking for administrative or hands-on duties to be fulfilled, outsourcing of HR functions can be highly beneficial. Here are seven of the most commonly outsourced HR functions.

1. HR Administration

Administrative functions typically include transactional duties, such as offering insights on procedures and policies, hiring support, employee development, and so on. What’s more, most HR outsourcing services provide HR tools, like self-service portals, to help manage and administer HR functions.

2. Payroll

Payroll functions require that various regulations are met. These duties include payroll setup, tax filing, processing payroll cycles, automated deductions, time and attendance, payroll and paid time off (PTO), and sick and vacation leave reporting. It’s essential, however, to ensure that you outsource these HR roles or tasks to reputable HR outsourcing services, as simple errors could lead to tax penalties or, worse, lawsuits.

3. Compliance and Risk Management

Compliance refers to ensuring that all policies and codes of conduct are followed. These regulations will vary depending on the industry, business type, and size. Having an outsourced HR team or professional on hand to handle these duties means that you will have the most up-to-date expertise on regulations close at hand. Using HR outsourcing services means you’ll have access to experts who can create employee handbooks, help develop policies, and handle employee documentation, safety guides, and training programs.

4. Recruitment

Hiring is another of the many HR duties that can be outsourced. However, talent acquisition has become more and more complex. HR outsourcing services have an extensive database of experienced professionals, increasing the chances of acquiring the best person for the role in the quickest turnaround time. These duties include writing job descriptions, posting positions on job boards, reviewing resumes, interviewing candidates, and filing paperwork.

5. Benefits

Benefits refer to any additional perks outside of your salary or wages. This includes things like healthcare, retirement and pensions, and childcare, as well as employee assistance counseling and programs. Outsourcing HR services generally offer tailored benefits packages to suit clients' needs.

6. Recognition and Rewards

Employers should always try to ensure high employee morale. It’s proven that higher employee morale means higher levels of productivity and efficiency. Rewards and recognition programs are a great way to keep employees motivated. This could be anything from annual performance bonuses, incentivised sales programs, or work anniversaries, for example. Program organization can be pretty time-consuming, making this one of the perfect HR roles to outsource. 

7. Performance Management

Performance management refers to monitoring employee conduct and giving employee feedback. HR outsourcing performance management services also include creating a performance appraisal system, managing performance challenges, maintaining employee files or records, and assisting leaders and managers when conducting performance reviews. This is yet another HR duty you could consider outsourcing as it goes hand in hand with boosting employee motivation.

Now that you know what HR functions you can outsource, let’s consider which ones you shouldn’t.

What HR Functions Shouldn’t Be Outsourced?

As much as there are HR functions you could stand to benefit from outsourcing, certain functions are better suited for on-site employees. These include:

• Conflict de-escalation/resolution
• Supporting employees through challenging times 
• Listening to employee needs
• Determining when to let an employee go
• Creating office culture

Due to its sensitive nature, certain aspects of HR and employee management require in-person HR staff. To help you decide which functions of HR to outsource and which ones to keep in-house, here are some things to keep in mind. 

5 Things To Consider When Outsourcing HR Functions

1. Processes

When outsourcing HR  functions, you may be required to adopt your chosen service provider’s processes and procedures. It’s, therefore, essential to consider if these processes align with yours or if your provider must follow yours.

2. Time Zones

When outsourcing HR functions, it's essential to ensure that your employees can access services during your business hours. If this isn’t possible, it’s advised that there is an overlap where employees and HR representatives are on shift at the same time for a few hours a day.

3. Quality vs. Cost

Most businesses are tempted to take the lowest offer when it comes to outsourcing. However, the lowest price may mean you’ll be compromising on quality. And when it comes to HR, this is definitely not an area to risk the quality level of services provided as it could result in improper processing of compliance reports or legally mandated payments. 

4. Global Protection & Data Privacy

Outsourcing functions of HR means that you’ll have to provide access to data and information that are of a sensitive nature. Be sure to vet your HR outsourcing services provider, check their reviews or client testimonials, and request data privacy policies before signing up.

5. Contract Length

Outsourcing HR duties can span anywhere from a year to 10 years, perhaps even longer — it's usually a long-term agreement. With this in mind, it's imperative that you choose your HR outsourcing services provider carefully and ensure that it's a good fit for your organization.

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