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5 Signs that You Should Outsource Your HR

Contributor: Evita Lara, HR Consultant

January 16th, 2023 | 4 min. read

By Tony Calavitta

5 Signs that You Should Outsource Your HR

As an employer, you have your hands full with day-to-day operations. Adding HR responsibilities to your already long list of to-dos can seem impossible.

If you are here, the struggle to run your business while managing a mountain of HR tasks is becoming overwhelming.

You know that you might need to decide between prioritizing either your involvement in revenue-generating operations or your attention to HR functions.

But, knowing the importance of each, how do you make that decision?

Here at Combined, our HR experts have helped countless employers, just like you, to find a personalized answer to this question. We want to help enable you to continue to grow your business while also having effective HR functions.

In this article, we will explore HR outsourcing as an approach to this very problem.

By reading, you’ll learn 5 signs to identify that can help you decide if outsourcing your HR is the right solution for your business.

What is HR Outsourcing?

HR outsourcing is delegating your HR tasks to an external HR professional.

Think of it like this – If your sink is clogged, you call a plumber. If your power stops working, you call an electrician. If your car breaks down, you call a mechanic.

So – if your HR needs help, who can you call? An HR service team.

Outsourced HR offers HR assistance tailored to the specific areas of HR you need help with.

Again, think of it like this – if your sink is clogged, a plumber is not going to attend to your toilet.

So – by outsourcing your HR, you can build a customized plan to address your specific HR needs. Whether it be consulting, recruitment and onboarding training, compliance management, or employee relations, outsourcing HR can offer you expert help to support and improve your HR functions.

Should you outsource your HR?

The short answer is YES! As your business grows, HR responsibilities do too. If you are feeling the weight of increasing HR demands, it may be time to consider outsourcing your HR.

5 signs that you should outsource your HR

Here are 5 signs that outsourcing your HR could be the solution you need.

1. The time you are spending on HR is taking away from your other responsibilities

We’ve all heard the expression “time is money.” In the case of running a business, this statement is especially true.

If you are spending time managing HR, less of your time is dedicated to revenue-generating operations. Along the lines of “time is money,” less time spent in this area means – you guessed it! – less money.

Maybe you have tasked another employee with HR management to prevent this. This added responsibility will draw time away from their other role.

Unless you have a designated HR position, handling HR will take up time that could be otherwise allocated. And what is time? Money.

If you are concerned about the amount of time you or your employees are spending on HR, it may be time to consider outsourcing your HR.

2. The cost of hiring a designated HR manager is too expensive

The simple solution to save time then is to hire an in-house HR professional whose only job responsibility is to manage HR.

With the average annual salary for a Human Resource Manager being $136,590, this solution is not as simple as it sounds.

Especially for small to mid-sized businesses, the cost of this position is not affordable. Smaller businesses also have fewer HR responsibilities, so the need doesn’t justify the cost either.

If your HR needs do not meet the cost of hiring a designated in-house HR manager, it may be time to consider outsourcing your HR.

3. You are at high risk of HR violations and penalties

HR management is an involved and complex task – it requires knowledge and monitoring of a wide range of employment laws.

In order to avoid violations and penalties, your business needs to follow intricacies in regulations specific to industry, location, and size, covering areas of employment law about recruitment, antidiscrimination, pay, leave, and…the list goes on and on.

Needless to say, risk-free HR management requires expertise.

If you are handling HR on your own or tasking an employee whose primary role and skill set is not HR, your business runs a high risk of noncompliance.

Here we go again – Your sink is clogged and, instead of calling a plumber, you troubleshoot and try to fix it all on your own. While you may get it working again, how certain can you be that the problem is actually taken care of?

The process of HR management by someone who is not a designated HR professional is similar to this idea of troubleshooting solutions. Your HR may appear to function fine, but you still cannot be 100% sure that all tasks are handled correctly.

This means that your business is continually exposed to liability.

If you are worried about your risk of noncompliance and the fines associated with it, it may be time to consider outsourcing your HR.

4. You do not have an established outlet for HR communication

Who can your employees speak to about HR concerns?

If you can’t answer this question, HR-related communication becomes a game of telephone:

Employees bring concerns to a higher-up.

Who then brings that information to a higher-up.

Who then brings that information to a higher-up.

And the cycle continues until the information finally lands in the right place.

But, by the time it does, is the information communicated even reflective of your employee’s concern?

But, by the time it does, is the information communicated even reflective of your employee’s concern?

Without an established outlet for HR communication, it is unlikely that HR concerns are properly addressed and appropriately solved.

If your method of HR communication is confusing and inefficient, it may be time to consider outsourcing your HR.

5. Your work culture lacks employee engagement

If your focus is split between revenue-generating operations and HR tasks, you likely are removed from actively creating a healthy work culture that prioritizes employee experience.

This may not sound like the end of the world, but in order to hire and retain top talent in today’s competitive job market, it is more important than ever for employers to foster employee engagement.

If a lack of employee engagement contributes to your business having a high turnover rate, it may be time to consider outsourcing your HR.

Take the next steps toward solving your HR problems

Finding a balance between running your business and managing HR operations is no easy feat. But there are available options that can help.

In this article, you explored HR outsourcing as one of these options and learned the 5 signs that may make it the right HR solution for your business.

And that – the right HR solution for your business – is exactly what our HR experts at Combined are determined to help you find. Having assisted businesses, both large and small, with their HR needs, our team is confident that we can direct you toward an easy, worry-free HR answer.

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If you aren’t yet ready to speak with an HR expert, you may find these resources helpful:

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.