Outsourcing HR can help you cover a vacancy, move a project forward, or access ongoing expertise as your organization grows. The right approach depends on the work you need done and your team’s existing capacity. Before choosing a provider, clarify the scope, who will make decisions internally, and how knowledge will stay with your organization.
Growing organizations will inevitably come to a point where they must decide how to scale their HR capacity. Circumstances, budget, and long-term business objectives all play a role in the decision-making process for the leadership team.
Perhaps there is a recently vacated role that needs immediate filling, or you need a senior HR practitioner to help create and support a solid People & Culture strategy as you build your team, but you do not yet have the resources to bring someone with that level of expertise on full-time. Outsourcing part or all your HR function might be the best path forward, but how do you know if this decision is right for your organization?
I’ve reflected often on this question, both as a practitioner working in a corporate setting and now leading a team of HR consultants at Stratford Group. Having sat on both sides of the table and having supported various organizations, I can say that there are some important elements to consider before making this decision.
Start With the HR Support You Need
The first question to ask yourself is, “What type of HR help is it that I need?” Broadly, there are two approaches: temporary support to fill a vacancy or deliver a project or ongoing support for part or all of your HR function. Understanding the difference will ensure that you are matching the correct outsourcing option that best fits your current and future needs.
Headcount is one consideration, but the complexity of your organization and the capabilities of your existing team also play a role in determining the support you need. A smaller organization may need senior HR guidance, while a larger employer may need some added bench strength for a specific project.
Temporary Support for a Vacancy or Project
The first option is to bring in an external HR expert who can hit the ground running to fill a position left vacant or support project work. This can help maintain continuity while giving your team the additional capacity it needs.
1. Someone has left your HR Team – we need to close that knowledge gap ‘’Tout de suite!”
It’s a common situation: someone from your team has resigned or left temporarily, sometimes unexpectedly. Obviously, we all wish that person the best of luck in their new career endeavours or prompt recovery in the case of a temporary leave but inevitably, you start thinking, “Who will take on the additional responsibilities and work while we find a replacement or wait for our colleague to return?’’
In this situation, reaching out to a reputable consulting firm with access to a pool of experienced HR practitioners can help cover the period of transition. The advantage of this approach is that you can keep your operational momentum and productivity moving without having to put important work on hold while you go through the recruitment process and give a new hire time to settle into the role.
To make that support effective, identify the responsibilities that need immediate attention and the decisions that require internal approval. Even an experienced practitioner needs an introduction to your organization and access to the right information.
2. Additional project work – call in reinforcements!
Have you ever been faced with a situation where, after an executive retreat, your boss walks into your office and says to you, ‘’I want to give you a heads up that the executive team has identified a number of enhancements/ modernization/ efficiency/upscaling / (i.e., insert any buzz word of choice that we have heard before). And we need additional projects/work to be delivered by HR to meet our strategic plan.’’
Understanding that your HR team is already at full capacity to deliver on ongoing business, this is the perfect scenario to call in reinforcements. Bringing in temporary resources to work in collaboration with your HR team can provide additional bandwidth or provide expertise for a particular project.
From a funding perspective, confirm the scope and available budget. Typically, but not always, additional projects and work come additional budget, which would allow you to absorb the related outsourcing costs. With or without additional dollars, it is important to agree on what can realistically be delivered.
Your internal HR team members can also benefit from the learning opportunity and outside perspective external HR experts bring to the table while continuing to focus on ‘’keeping the wheels on the bus’’ making this a win-win situation.
Ongoing Support for Your HR Function
The second option is to outsource part or all of your HR function on an ongoing basis. Depending on your needs and internal capabilities, this can provide access to expertise without hiring for every requirement.
1. It’s time to invest in HR!
As organizations grow from a start-up to an established team, People & Culture considerations become a focal point used to attract, engage, and retain talent. Responsibilities that once sat with a founder or office manager may begin to require more time and specialized knowledge.
Typically, this option is best suited for smaller organizations, looking to scale, who would not yet have a dedicated HR person on staff. Hiring a seasoned HR resource full-time may still be outside of your budget, but you may need that level of guidance for certain decisions.
An outsourced arrangement can give you access to experienced support at both an operational and strategic level. The cost will depend on the scope and level of support required, so compare it with the work you need done and the alternatives available.
2. A new perspective to an established HR team
For organizations with a dedicated HR person or HR department may still need additional capacity or specialized expertise beyond daily operations. Recruitment, Compensation, Performance Management, and Leadership Development are examples of work that can require focused support.
In this scenario, outsourcing part of your HR function can complement your team’s existing capabilities and help it respond to evolving business needs. An outside perspective can also help the team assess its current practices and decide where improvements would be useful.
What to Clarify Before Choosing a Provider
There are many combinations of support available. Before speaking with reputable HR Consulting firms, it helps to work through a few practical questions:
- What needs attention first? Be specific about the gap and what a successful outcome would look like.
- How much support do you need, and for how long? A temporary vacancy, defined project, and ongoing advisory role each call for a different arrangement.
- Who will own the relationship internally? Agree on how the provider will work with your team, who approves decisions, and how employees will access support.
- How will knowledge stay with your organization? Discuss documentation and handover so your team can carry the work forward as the arrangement changes.
The right arrangement should support your organization today and be reviewed as your needs evolve. That may mean interim coverage during a transition, ongoing senior guidance, or focused help for an internal team. I hope this insight will help you reflect on some key considerations to make the decision on outsourcing all or in part of your HR function.
Ready to discuss your HR capacity?
If your HR workload is outgrowing your available capacity, Stratford can help you assess the gap and explore the level of support that fits your organization. Learn more about our Virtual & Interim HR Services and start a conversation about what you need.
About the Author:
This blog post was originally published in the Ottawa Business Journal in 2022. It has been updated with new content.