The pandemic brought about rapid changes in the HR function – from early days of figuring out work-from-home policies to supporting new hybrid work models, employee expectations and meeting the challenges of recruiting today. Now, as we (hopefully) approach an endemic phase, the experiences of the pandemic have changed HR – and the job is not getting any easier.
Employees today expect even more flexibility from their employers with regard to work models and locations as well as supporting health and work-life balance. The challenges of hiring and keeping great talent must be met by enhancing employee experience, enhancing global mobility and providing upskilling and reskilling opportunities. And HR, once reliant on processes that took weeks or months to do are now being asked to turn on a dime and work faster, more efficiently and with even greater attachment to business and revenue goals.
The Role of HR is Rapidly Evolving
According to McKinsey, “While the nature and purpose of the HR function have been evolving for years, the demands of the pandemic dramatically accelerated this transition. In interviews with more than 80 chief human resources officers (CHROs) at some of the largest organizations in the United States and Europe, we found more than 90 percent predict significant changes to the HR operating model during the next two to three years.”
While this poses new challenges for HR leaders, the experiences of the pandemic have also presented HR with unprecedented opportunities that will support this evolution of HR, including:
Renewed focus on employee experience
This impacts HR in myriad ways, both as employees themselves and in HR’s expanded role in creating and fostering great candidate and employee experiences. It’s essential to understand the balance between human touch points versus self-service efficiencies.
Expansion of HR Skill Sets
The HR generalist model is no longer effective, as today’s workforce has different workplace expectations that demand a more specialist approach. It’s impossible for a generalist to be good at recruiting and attracting talent as well as developing and nurturing talent as well as optimizing practices as well as retaining talent with comp-market-rate studies. In the advancement of the function, HR has been segmented into specialists that can be engaged seasonally or hired full-time. And, thanks to the pandemic’s influence on remote work capabilities, HR teams are no longer limited to the expertise in their area and can draw from a much wider range of experts.
Recognized business value
HR, more than ever, has a seat at the table as a critical business function. For many organizations, this means having to uplevel the already overworked core HR staff to handle the most strategic aspects of their jobs – while leaving a vacuum that must be filled to handle basic HR functions. These block-and-tackle HR functions can often be managed with a shared service model.
Together, these enhanced experiences and expectations for HR leaders have created an opportunity for HR leaders to rethink their roles – to look more strategically at HR functions that are mission-critical to be done in-house, consider when outside expertise and specialists are needed to enhance and uplevel HR services and determine which HR functions could be better (and more cost-effectively) managed through outsourcing.
Outsourcing of HR Functions Is a Fast-Growing Trend
“The pandemic has further accelerated HR outsourcing as enterprises seek service provider support to ensure talent retention and business continuity,” according to consulting firm Avasant in their report Global Hire-to-Retire Business Process Transformation 2021-22 RadarView . “HR outsourcing adoption grew by 7% between June 2020 and June 2021. This is attributable to a surge in cost constraints and business continuity impacted by the pandemic.”
While being faced with the huge challenge of sourcing, hiring and onboarding employees across company functions, HR itself is now in hiring mode. Finding – and retaining – HR leaders with the breadth and depth of experience an organization need is increasingly difficult.
At the same time, there are now considerably more highly experienced HR leaders who have decided to work from home and/or work part-time. These are often people with a great deal of experience and hard-to-find skills that, before the pandemic, would have needed to be onsite. Now, thanks to videoconferencing and remote work models, the right HR professional for your needs may be in a completely different area of the country – and it doesn’t matter.
Three Ways to Boost Effectiveness with HR Outsourcing
The key to success in HR outsourcing is knowing when and how to use it most effectively. When done well, it bolsters your internal HR team with both expertise and extra hands, and it affords HR leaders the time and space to engage more strategically as business leaders within their organizations.
1) Enter with a spirit of teamwork and growth for your internal HR team.
As you prepare to outsource some HR functions, staying focused on your “why” helps your in-house HR people feel valued and appreciated while helping them work more effectively with interim or outsourced HR experts.
According to Deloitte, outsourcing creates new opportunities for existing employees, “Not only to improve morale but to promote creativity and enhance their overall value to the organization. Certain auxiliary tasks that are outsourced, allow in-house talent to focus on more strategic activities and projects that better leverage their skill sets, knowledge, and abilities and truly generate results. Similarly, for every employee that is not hired to perform a support function, more budget is available to hire a revenue-generating employee.”
2) Maintain best practices and processes for outsourcing.
Hiring needs are cyclical. In periods of great need, it’s tempting to add headcount to the HR department, but at the next economic downturn, when layoffs are again on the table, it’s often the cost centers like HR that take the biggest hit, losing people who aren’t directly tied to revenue. Having a plan ready for outsourcing, supported by best practices and processes, will give you a great deal more business agility.
3) Consider ongoing outsourcing for some HR functions.
HR departments need consistency and congruency in order to ensure the best experiences for candidates and employees regardless of trends. So, HR departments that are adept at outsourcing on a regular or ongoing basis develop trusted partnerships with outsourcing providers who bring the ability to scale up and scale down as needed. This gives your HR department access to a wider range of experts and enables you to bring in the help you need, right when it’s needed, without having to add a headcount that may be lost later.
How to Decide When to Outsource – Look for the Gaps
Before you engage with an outsourcing partner, it’s important to do an audit of your current team’s capabilities as well as their professional growth desires. Look for the gaps. Knowing what your HR team is good at, where you could grow your team internally and where you could use some expert help – is essential.
For example, our company provides outsourced HR help across a range of corporate HR functions, so we receive inquiries on a lot of HR subjects. Here are four areas we are consistently asked to support – and the reasons companies tell us they are seeking outsourced help:
● Recruiting – This is a service many HR teams find is easiest to outsource first, partly because there is a great deal of domain expertise required and because having an outsourced partner that brings a host of their own contacts and capabilities to the table is a boon to recruiting efforts.
● HR systems – Many companies have invested in HR software that looked great in the demo but turned out to be significantly harder to implement in actual practice. Outsourcing is an easy way to get an experienced program manager who already knows how to configure and implement software to support the entire HRIS program.
● Compensation – As a critical aspect of both recruiting and retention, you want your compensation to be at a fair market rate and to be confident that you’re paying people fairly up and down pay bands as well as by years of experience. This requires you to always have your finger on the pulse of the market. Now, with the enhanced mobility of the workforce, new questions arise, like, how should we compensate an employee we hired in Southern California salary be compensated if they move to Tennessee where the cost of living is much lower? Do we decrease their salary? Or should we increase the salary of our other Tennessee-based people? Merit increases are typically 3.5-4%, but inflation is 8% -- how are other companies handling that? These are all excellent questions that outsourced compensation experts can help you with.
● Global mobility – Like compensation, there are other aspects to mobility to be considered across state lines. But mobility isn’t just an in-country issue – mergers, acquisitions and international expansion are driving more mid-size companies into the multinational realm, and that requires special knowledge of immigration, tax and relocation processes. Is that expertise you will need to have on board permanently? Probably not. But, like your legal counsel, it’s an area you may need to return to on an as-needed basis, so establishing a partnership with an expert firm on an outsourced basis may be just want you need.
Outsourcing can also be used strategically for things like HR program planning and project management, where an outside expert can provide best-practices guidance without undue influence from any internal history or politics. Having the 3rd party view from a credible, outsourced partner can also help you make the case for, and back up, your plans and decisions when it’s time to garner input and buy-in from management, giving HR a more visible seat at the table with other executive management.
So, whether you need interim help to balance a heavy workload, expert help with highly specific HR functions you don’t need in-house, or general consultation and guidance, there is an HR outsourcing HR partner that’s right for you.