Why You Should Outsource HR & 10 Questions to Ask Yourself

Human Resource is an ever-changing field that continues to pose challenges for small businesses across the country. Especially in 2020, where businesses have had to adapt to the pandemic, and even restructure their organizations due to a difficult economy. Considering outsourced HR is becoming more of an option for businesses to cut costs, reduce some administrative tasks, and free up management for more critical tasks.

There are some tell-tale signs that you should look out for when deciding if outsourcing HR is right for you. In this post, we’ll look at when is the right time to do so.

Deciding to Outsource HR

For many small business owners, the thought of outsourcing HR seems frankly unnecessary. Often, small business owners have the mindset that they must do it all themselves. When in reality this may actually be a detriment to the business’s growth.

Being a small business owner does mean that a person’s list of skills and knowledge needs to cover every aspect of the industry in order to be successful. While having the skill and knowledge is one thing, having the time and energy to run it is another. It’s important for small business owners to recognize where their strength in running the business is and what tasks are most critical and take the highest priority.

Business growth occurs when there are time and freedom to creatively problem solve, collaborate, and cement the details of a vision. A small business that is beginning to feel growing pains needs to address those and capitalize on opportunities. The owner and all-important players need to be focused on revenue generation.

While it would be wonderful to pass on particular details to someone else so that this can occur, often the task falls to the owner, or to an employee who could be more productive completing other tasks. A small business owner may find that they are feeling weighed down by the required tasks of:

  • Documenting performance reviews of current employees
  • Searching for, interviewing, and hiring new employees
  • Conducting new employee training
  • Creating and updating an employee handbook
  • Crafting agreements and contracts
  • Keeping up to date with the latest employee regulations, tax issues, and OSHA requirements

There comes a time when these tasks can no longer be on a small business owner’s “TO DO” list. The answer is outsourcing. And no, outsourcing is not a strategy reserved for big businesses.

When should I outsource hr?

In general, you should outsource hr when it is cost-effective to do so, when you don’t have the expertise or skill to do a task in house, or when you need help with certain tasks like recruiting, training, handbook, contracts, or other documents developed.

10 Questions to Ask Yourself

How do you know if it is time to outsource? One option is to start with the pros and cons of outsourcing. Then, ask yourself these questions. If you answer a strong yes to more than two of them, it may be time to consider outsourcing your human resources responsibilities.

  1. Do I have a high turnover rate? Or are my staff members leaving more frequently than I’d like?
  2. Do I have an up to date handbook with proper procedures and best practices outlined?
  3. Do I struggle to recruit the right employees? Or do I have time to go through the hiring, interviewing, and application process?
  4. Am I missing performance reviews for my employees?
  5. Can someone else do these processes more efficiently or at a lower cost?
  6. Is it cheaper to outsource than to have an in house department?
  7. Do I need a special project or task completed that is beyond the abilities of my current staff members?
  8. Has my “family-run” business expanded? And am I hiring more employees requiring contracts?
  9. Do I have the training and onboarding processes for new employees?
  10. Am I spending too much time on non-revenue-generating tasks?

Professionals who specialize in human resources are readily available in the form of consultants, firms, and companies. You can often choose to have a human resource representative who will take care of “a la cart” responsibilities, or you can choose to hand over all human resource operating tasks to an expert. And that is what they are: an expert. Human resource responsibilities no longer need to be a worry of a small business owner.

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