In-House Vs. Outsourced HR: Weighing the Pros & Cons
Business process outsourcing is so common these days that most of us barely think about it. Around 66% of U.S. businesses rely on outsourcing partners to manage everything from accounting to logistics to marketing.
But you might hesitate at the thought of outsourcing some processes, such as Human Resources. After all, HR is the heart of your company, responsible for everything from organizational culture to the day-to-day employee experience. Whoever you hire, it needs to be someone you can rely on.
Hire someone full-time, or turn to outsourced HR?
So, should you always hire full-time HR? Or should you look at HR outsourcing solutions?
The answer is: it depends on your circumstances. Let's take a look at the pros and cons of each approach.
Pros of Hiring a Full-Time HR Resource
- Dedicated and regular on-site presence
A full-time, in-house HR resource can dedicate all of their time to the company. They can work on-site if needed and serve as a single point of contact for HR areas.
- Comprehensive management of HR functions
A full-time HR resource can manage timesheet approvals and benefits offering changes, function as a retirement plan fiduciary, and be the company’s people manager, delivering corrective action and performance reviews.
- Relationship building
A full-time HR resource can integrate fully into the team and the organizational culture. They'll build long-term relationships with people across the company, including senior leadership.
- Broad bandwidth
A full-time HR resource can focus on the needs of your HR function, including administrative tasks. They're not distracted by other responsibilities, nor are they limited to budgeted hours.
Cons of Hiring a Full-Time HR Resource
- Limited experience and knowledge
One of the potential drawbacks of a single-resource HR team is that you're limited to the individual employee's background and experience. This can be a constraint if you need access to more specialized HR expertise, such as knowledge of government contracting compliance or other industries.
- Operational and strategic balance
Operational HR and Strategic HR are very different, and an employee who is good at one might struggle at the other. This can be a limitation if, for example, you need your HR team to work on strategic projects like employer branding or improving your organizational culture.
- Risks of hasty hiring
When there's a rush to fill an HR role, businesses often hire without fully understanding their true needs and the desired outcomes for their HR function. This can result in hiring at the wrong level or finding that the new resource lacks the necessary skills and knowledge to achieve the company's HR goals.
- Perception of HR's role
Employees may perceive an in-house HR resource as more 'on their side,' which can lead to a misunderstanding of the HR's role in protecting both the employee's and the employer's interests.
- Potential inefficiencies and workload concerns
Depending on the specific business and employee population, an in-house HR professional may not have a full-time workload, leading to potential inefficiencies. In other cases, the demands may be so great that a single HR professional struggles to manage the workload.
Understanding these pros and cons can provide a clearer picture of what to expect when hiring a full-time HR resource, but it's also important to explore the other side of the coin: outsourcing HR services.
Exploring Outsourced HR
Outsourced HR gives you flexible HR resources when you need them. When you partner with an HR consulting partner (such as Helios HR), you get access to consultants who can help with your current needs.
Pros of Outsourcing HR
- Strategic and unbiased partner
An outsourced HR service like Helios acts as an unbiased strategic partner for your business. Your consultant can examine your HR practices, give you objective feedback, and advise on how to implement best practices. They can also identify any potential compliance issues.
- Variety of HR skills
Outsourced HR gives you access to the kind of expertise you need, when you need it. This ranges from foundational HR for day-to-day tasks, operational HR for management, and strategic HR for long-term planning.
- Dedicated HR consultant or team
Despite being outsourced, you still have a dedicated HR Consultant (or team) who will operate as your HR representative and build relationships with your employees and leaders, ensuring a strong HR presence within your organization.
- Customization according to your business needs
Outsourced HR services can scale up or down, from fractional HR consultant for part-time help to project consultants who will deliver large-scale initiatives, like a major hiring drive. Because outsourced HR works on a contract basis, you can change the terms of your engagement in accordance with your evolving needs.
- Regulatory and policy oversight
Keeping up with regulatory changes and maintaining best practices in HR policies and procedures can be challenging. An outsourced HR team stays on top of these developments and can help your organization stay compliant and up-to-date.
- Expertise and efficiency in HR program execution
With a wealth of knowledge and experience, an outsourced HR team can bring efficiencies and expertise to your organization, assisting in the development and execution of your HR programs.
- Flexibility and Cost Considerations
Outsourced HR gives your business flexibility. You can determine the length of the contract and any extensions. This means you're not tied to the costs of maintaining a full-time resource if one is not truly needed.
Cons of Outsourcing HR
- Allocation of resource time
In most cases, an outsourced HR service is not allocated full-time. However, your consultant remains accessible throughout the week.
- Initial cost implications
While the long-term benefits can outweigh the costs, the initial outlay for outsourcing HR may seem higher. However, remember that you aren't responsible for additional costs such as benefits, PTO, bonuses, and training, which are typical with an internal resource.
- Decision-making role
While an outsourced partner will guide you through making the best decisions for your goals and objectives, they won't function as a decision-maker within the business.
- Limitations in managerial or fiduciary responsibilities
An outsourced partner generally won't take on full managerial or fiduciary responsibilities for the business, which may be a consideration for some companies.
Making the Decision: Full-Time HR vs. Outsourced HR
Full-time HR versus outsourced HR doesn't have to be an either/or proposition. Many companies use a blend of both, with an in-house team receiving support from our team of HR consultants.
Does your team need access to HR expertise? Talk to a Helios HR consultant and let's talk about how we can help you build your ideal team.