HR can be time-consuming. As your team grows, you can find yourself dealing with more and more staff issues and trying to navigate your way through the latest changes in employment law.
Luckily, there’s a solution to mounting HR pressures: outsourced HR services.
But if you’re not from the world of HR, how do you know what you can or should outsource to make your organisation run that little bit more smoothly?
The starting point is thinking about your goals and what services you need to help your business thrive.
In this guide, we’ll go through what you need to think about before outsourcing your HR, to help you determine the services your HR consultants need to help you with.
How big is your business?
You’ll have different HR needs based on your business size. If you’re a small business, you’ll probably need more generalist support and help with tasks such as payroll and compliance.
If you have a medium to large business, your needs could be more complex. On top of that, if you operate on a national or international scale you may need HR consultants who have knowledge of geographical differences in pay, benefits and working conditions.
In general, the more employees you have, the more HR support you’ll need. For example, in a small business with 20 employees, you may only need a handful of hours generalist support each month. However, in a larger business of 200 employees, more capacity in your HR provision will help you cover off both day-to-day operational and strategic HR work, such as employee career growth and development, engagement and wellbeing
If you employ HR professionals inhouse and have an understaffed HR department, this can lead to staff burnout, turnover and decreased productivity. And, by outsourcing some areas of the function or specific HR projects or casework, you’ll ensure that you have enough people on hand to help you with all your HR needs. As your business grows, your outsourced HR provision can allocate resources in the areas you need help with the most, and can help scale your HR team quickly.
What industry-specific HR needs do you have?
You’ll also need to think about whether you have any industry-specific HR needs. For example, if you have a manufacturing company, you’ll need to ensure that you are up to date with all health and safety laws and your employees have all had the correct training.
In industries like education and healthcare, there will be a bigger focus on safeguarding, and you may need help with whistleblowing policies. There will be compliance considerations for these industries too – employees may need specific qualifications to work for your company.
Consider whether you are facing recruitment challenges. The British Chambers of Commerce found that 66% of firms faced challenges in recruiting staff in the first quarter of 2024, with production and manufacturing struggling the most (70%), followed by construction and logistics (69%) and hospitality (64%). If you’re finding it hard to recruit, consider whether an HR company could help you manage these challenges.
What does your management structure look like?
When you’re considering outsourcing your HR, it’s a good idea to look at your management structure. This will help you to understand how much time your managers realistically have to spend on HR and what you may need help with.
Generally speaking, businesses have one of two management structures: flat or hierarchical.
In a flat management structure, there are fewer middle managers, which means there’s more access to decision-makers, and issues or queries can be resolved quickly. A flat structure also usually gives employees more autonomy in their roles, which can boost job satisfaction.
However, in a hierarchical structure, decisions are usually left to senior managers. This gives a clear process for decision-making, but it can make it slower.
Flat management structures can often lead to managers taking on more HR responsibilities than in hierarchical structures. Consider whether your managers have the capacity to deal with HR – if you want them to do their best work, the chances are it’s better to outsource your HR.
If you want your managers to run with HR – it’s likely you’ll still need some outsourced HR input in the form of management training to make sure your people managers have the skills they need.
How do you engage your staff?
For this one, we’re talking about contracts or agreements. The reality of your working relationship your staff will also impact your HR needs. Do you have employees or do you work with freelancers? Are your employees on full-time contracts or zero-hours contracts?
Businesses with employees will likely require more HR involvement for things like payroll, absences, wellbeing and engagement. However, even if you mainly work with freelancers or contractors, you still have a duty of care to them. Using a company for HR services can help you meet your obligations to all staff, no matter their employment status.
How happy are your employees?
A part of HR that is often overlooked in small businesses is engagement. Do you know how satisfied and engaged your employees are?
Before you outsource your HR services, it’s a good idea to think about whether you use any engagement methods with your team already. Do you have an employee recognition programme? Can your employees ask for training that will help them do their jobs better?
Engaging with your employees helps you to build a strong company culture. With a good organisational culture, you’ll find that your employees feel empowered to do their best work, want to stay at your company for longer and offer more innovative ideas.
An HR company can provide you with HR services that enhance engagement, such as conducting employee engagement surveys, putting together training and development programmes and drafting employee wellbeing strategies.
What people-related challenges do you face?
Take a look at the most common HR challenges you and your managers face regularly. A common area that businesses spend a lot of time on, for instance, is the recruitment and retention of staff. Employee training is another an area that can take considerable time.
Think about whether your managers spend a lot of time on employee relations. Do they get sidetracked with absence or grievance investigations? When you outsource your HR services you reduce the amount of time your team needs to spend on these activities by simply passing the case on to an expert in this area.
An HR consultancy can also help you put steps in place to resolve conflict and improve workplace morale. If you’re struggling with these issues, it’s often a sign that you could do with the additional resource that outsourced HR services can provide.
Do you acquire new companies?
If your company often undertakes mergers and acquisitions, you’ll need to ensure you meet your obligations as an employer under the Transfer of Undertakings (Protection of Employment) regulations, also known as TUPE. This is one of the more legally complex areas of HR and can be a minefield if you’ve not been through a TUPE process before.
It’s vital that TUPE regulations are followed. If you fail to comply with them, you could end up having to pay compensation if an employee successfully takes you to an employment tribunal. This could be up to 13 weeks’ uncapped gross pay per affected employee.
An HR company can deal with TUPE for you, but this isn’t the only HR service you need to consider when you acquire or merge with a company. To successfully integrate your transferred employees, you should also think about a cultural assessment; compare the old employer’s policies with yours. Identify the similarities and differences so you understand how much work needs to be done to align them.
The CIPD states that meaningful employee engagement can optimise the transfer’s success and reduce the likelihood of employment claims, so it’s important to get it right. Engaging an HR company to help you with TUPE could save you money in the long term.
What are your growth plans?
As your business grows, your HR needs will grow too. While your HR needs as a small business may be simple to begin with, for example just requiring help with contracts, policies and recruitment, as you grow you will need much more from an HR consultancy.
Your recruitment needs may turn into an entire resourcing and talent planning function, requiring thought about things like your employer brand and candidate outreach.
As your staff numbers grow, HR becomes more complex. Some of your HR needs will change more quickly than others, so you need flexible HR services that evolve with your business. That means finding an HR company that specialises in all HR functions, so as soon as you need that service, your HR consultants can help.
What HR services can be outsourced?
All HR services across the employee life cycle can be outsourced when you find the right company. The most popular types of outsourced HR services include:
- Resourcing & talent planning – including recruitment strategy, job advertising and succession planning
- People management – including contracts, employee handbooks and performance management
- Organisation development – including constructing organisational values, change management and EDI
- Business change – including redundancies, restructuring and executive exits
- Learning & development – including performance and career coaching, 360-degree feedback and training courses
- Employee relations – including disciplinaries, grievances, workplace mediation and capability and underperformance
- Pay & benefits – including gender pay gap reporting, employee benefits and pensions
Spend time considering how much help you require with each of these HR services. You may only need help with some of these functions straight away, but as your business evolves you’ll find that your requirements become more complex and time-consuming for managers.
The benefits of outsourced HR services
If you’re thinking to yourself, is it a good ideal to outsource HR? It’s probably a sign you need a helping hand. It’s not always right to have an in-house HR team in your organisation, or to have every HR function covered by your in-house team. Here are just some of the benefits of outsourcing your HR services:
- Cost-effective – Outsourcing your HR means you’ll save money. You can get access to a large HR team without having to pay for multiple full-time salaries.
- Efficient – By reducing your managers’ workloads, they can focus on empowering their teams to do their best work
- Expertise and compliance – Get access to specialised knowledge and ensure compliance with the latest legal requirements
- Improved staff retention – Focus on employee engagement and wellbeing rather than worrying about compliance, improving retention in the long term
- Better scalability – Instantly adjust your HR support as your business grows without needing to hire more staff
Now that you know the considerations you need to make when you’re thinking about outsourced HR services and you know the benefits, you’ll have a solid understanding of the HR services you need to outsource to help your business thrive.
How we can help with outsourced HR services
Fitzgerald HR is a full-service HR consultancy. We can integrate seamlessly with your business so it feels like you have an in-house HR team whenever you need it. Our team of expert HR consultants means that you can harness the power of a large HR department without having to hire one yourself.
We help small businesses without an HR team to larger companies who need additional resource, either temporarily or permanently. We believe that expert guidance on how to recruit, retain, develop and lead people should be available to every business so you can create a culture where everyone brings the best version of themselves to work.
Book a free consultation or call us on 0330 223 5253 to see how we can help your business grow with specialist HR services.
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