Has your business or S.M.E. ever weighed up the advantages/disadvantages of having outsourced HR

The information on this page has aimed to make it clear how important HR is to your business and its future success.

There are two key options at this point, which will be broken down to help you decide which is best for your organisation:

  1. Having an internal member of HR;

  2. Outsourcing your HR needs

Internal HR staff

The first option is to hire an internal HR employee, either by promoting from within or through the normal recruitment process. See below for the advantages and disadvantages of hiring an internal HR Employee for your small business.

Advantages

Good chance to promote an employee giving them a new role

You can specifically choose who deals with your HR

Having an HR manager actually in your business will make HR processes and changes quicker as meetings are likely to be easier to arrange

Disadvantages

Not a cost-effective solution – the employee will have to be salaried at a higher cost than outsourcing HR

You can specifically choose who deals with your HR

HR Consultants are experts in what they do – it can be difficult to get an employee with the right qualifications, knowledger and experience to uphold these standards

Your employee and you as the owner are liable if any HR processes go wrong

If you promote an employee internally, there will be a huge responsibility on your part to train them to the professional standard required

Dealing with HR is hugely time consuming – and to do it well, it requires an even bigger amount of knowledge, experience and investment of resources

Outsourcing HR

The second option is to outsource your HR needs to an HR Consultancy. See below for the advantages and disadvantages of doing so.

Advantages

Outsourcing HR will usually be a more cost-effective option for small businesses

As previously mentioned, an HR Consultant will be experts in that field, ensuring your business will receive the highest standards of HR management

By outsourcing your HR needs, you can reduce the pressure on yourself and your employees, and direct your attention and resources to tasks.

HR Consultants will tailor their services to the needs of your business, ensuring you get the right HR management to support those needs

There is huge value in having experts perform your HR management. They will stay ahead of any trends and changes in legislation that impacts on HR, and constantly aim to improve their services to ensure they add value to your business and build trust to support a long-term relationship.

 

It’s within their interests, therefore, to work collaboratively with the business to deliver best service they can

As your business grows, you may require more complex HR resolutions, which internal employees may not have the capability to handle

Your business will not be liable for any problems that arise with your HR

Disadvantages

By outsourcing your HR requirements,

it means you will not get a chance to internally promote an employee and give them the opportunity to develop or change their career path

Not having an internal HR dedicated employee means less direct control over your HR management

Implementing changes may take longer because your HR manager will not be in-house

Summary of pros and cons

Generally speaking, internal HR will give you a chance to promote internally, or at least select your own HR employee, meaning you have more control over the specific person(s) responsible for HR. Having them in-house will also mean changes may be quicker, as you will be able to see the employee regularly face-to-face.

Internal HR, however, will usually not be the most cost-effective solution, and there will be a considerable responsibility on your part to train the employee to the required professional standard i.e.CIPD.

Your business will be liable for any HR problems, and generally, dealing with HR is a complex and time-consuming function that will require a significant amount of resource.

In outsourcing your HR needs, you’re likely to save a substantial amount of time and resources (which is crucial to a small business’s growth) all the while using the industry-leading expertise that your selected consultant will offer.

Outsourcing HR is more cost-effective for smaller businesses and will take the pressure off you. It’s also worth bearing in mind that it is in the HR consultants best interests to give you the best service they can, as you are more likely to retain their services and recommend them to other businesses.