Wasn’t it Shakespeare who said, “To outsource or not to outsource, that is the question!”. Of course it wasn’t. Nonetheless, the decision of whether to take care of a particular function ‘in house’ or to outsource it to an external provider is one that many nascent businesses find themselves agonizing over. New entrepreneurs are conditioned to be averse to expenditure and having parted ways with significant amounts of startup capital to get their businesses up and running, it’s understandable that they should be skittish about the prospect of forking out their profits for something that could conceivably be done by their own employees alongside their more quotidian duties.
Although it’s a generally acknowledged truth that marketing costs to outsourced services represent a great return on investment, few are as quick to extol the virtues of outsourcing HR functions. However, the practice does have some inherent advantages…
Compliance is really, really important
People spend years training to be HR specialists and with good reason. There’s a lot more to the discipline than hiring, firing and perspiring. While you or one of your employees may be able to handle some quotidian HR functions, you / they will be unlikely to have the time to learn the intricacies of compliance regulations, or labor and tax laws with which HR specialists are conversant.
Whether your business employs 3 employees or 300 it is legally obliged to follow specific HR processes in accordance with federal law which have become even more elaborate and exacting in recent years. While you may feel that your business can’t afford to part with the ongoing expense of outsourcing your HR functions this may be a false economy. Besides, you almost certainly can’t afford to pay the incumbent expenses and fines if your business is found to be non-compliant.
Because time is money
Entrepreneurs work an average of 50-55 hours a week. In this context it may not seem the case, but very moment of your time is precious. Your time on site should be divided between facilitating daily operations for your business and involving yourself in the strategic management of your business from a more macro perspective. This leaves little free time for functions best left to professionals.
You will be unlikely to carry out HR function as time efficiently as an HR specialist, and every hour you spend on these processes leeches away at your productivity.
Because HR function requires specific resources
Not only do HR functions require specific processes, they require investment in specific resources. By the time you’ve invested in the correct HR management software and spent the time necessary to learn to use it, you may actually find yourself worse off than if you outsourced from the get go. Beware of false economy.
Because recruitment can make or break your business
The ongoing success and growth of your business hinges on your ability to recruit top tier candidates and this isn’t always achieved by trying to handle the recruitment process ‘in house’. HR professionals, on the other hand, will work collaboratively with you to qualify and quantify the exact needs of a given post and thereby determine the qualities and experience to look for in the ideal candidate.