Operations that can be outsourced

Firms of any size can benefit from the expertise of an outsourcing service,
customised to handle any of eight specific HR functions

In theory, all aspects of human resource management can be outsourced, from
strategy to administration. What an organisation chooses to outsource will
depend on a series of factors unique to that organisation – including strategic
goals, current HR capability, HR objectives, cost savings achievable and
desired benefits. Total customisation is possible and organisations can
outsource any or all of the areas listed below:

1. Strategy

Defining an HR strategy, and dealing with communications and personnel
audits, can often benefit from an objective external viewpoint. Taking a step
back from the day-to-day issues, and revisiting the business objectives can
result in a truly aligned HR strategy.

An HR outsourcing service provider is in a unique position to provide an
external overview of an entire organisation’s HR practices, ensuring all
functions are aligned to best practice and business objectives. Having an
excellent recruitment function is not enough without equally valuable induction
and development processes.

For large-scale projects such as organisational change, an outsourcing
service can act as a catalyst for accelerated change. Outsourcers can work in
partnership with a company to manage any changes deemed necessary without becoming
embroiled in the politics of an organisation. They can also remain objective
and ensure the right decisions are made for the business, and any possibly
contentious decisions about employees are handled appropriately.

Outsourcers bring experience of organisational change from a wide range of
corporations and industries and are therefore in a position to impart their
knowledge and learning.

Outsourcing services can also devise and support strategies such as
retention and succession planning which are often introduced just in time to
address an issue, rather than worked on as a long-term strategic issue.

2. Employee benefits

Employee benefits, and particularly payroll, are areas that have been
commonly outsourced and HR outsourcing providers can provide thorough advice
and implementation in this area. SMEs (small, medium-sized enterprises) that
are frequently growing through mergers and acquisitions, for instance, will
need support to bring a multitude of pay bands, payroll systems and benefits
into line.

For larger employers which may be looking at remuneration strategy, external
expertise is often required to benchmark with their own marketplace and other
industries. As flexible benefits become more popular – where employees choose
from a range of optional benefits to supplement their basic salary – the
administration becomes more complicated and there are many more suppliers. An
outsourcing service provider will have these systems in place already, and will
be experienced at dealing with a variety of packages. Technology allows
employees access to self-service desktops that give them a specially tailored
view of their personal data, employees can keep in constant contact with the
benefits they have selected, their value and information such as their next pay
day and expense account balances. Payroll is one area that must be handled
efficiently, as mistakes on payrolls can affect employee livelihoods.

3. Health, safety, welfare

Increasingly the health, safety and welfare of all employees is being subjected
to a plethora of legislation designed to protect the individual in their
workplace. Many smaller companies place emphasis on risk assessment ensuring
proper consideration has been given to an employee’s working environment. Many
employers will be familiar with workstation assessments but how many have
considered the full implications of working patterns, working from home or the
risks associated with road safety for their company drivers? Storage of
inflammable materials is often overlooked especially where storage space is at
a premium. A company can no longer afford to ignore health and safety

In recent years there has been a substantial move to place a clear line of
responsibility for health and safety matters on senior management and this is
not a responsibility that can be delegated.

This was clearly seen in the aftermath of the Hatfield rail disaster, where
questions over the culpability of the board of Railtrack were raised. Recent proposals
from the Home Office indicate that the law relating to corporate manslaughter
will be brought into the statute books within the next 18 months aiming to make
both private individuals and employer accountable for their actions. This
legislation will force all companies to nominate a director who will be
responsible for health and safety.

The statute is also likely to require proper investigation of all reportable
workplace accidents, ill-health and ‘near miss’ incidents. Whatever the outcome
of these legislative moves employers can expect health and safety to soon
become a standing issue on the board agenda.

4. Managing employee relations

One of the top three reasons for a company to decide to outsource their HR
function is to gain access to employment law expertise and to handle any
employment issues correctly. Obviously, an outsourcer will put HR policies and
practices into place that aim to avoid the necessity of seeking employment law
advice. Where advice is necessary, outsourcing services can guide employers
through employment tribunals, redundancy and redeployment, discipline and
grievance and discrimination legislation.

Retaining an HR outsourcing provider to handle this area has distinct
advantages over employing a law firm. These benefits include:

– It will be involved with the organisation on a long-term basis. It will
therefore be working with the organisation before an issue develops, enabling
its staff to have greater understanding of the incident. Law firms will
generally be retained after the event, requiring in-depth briefing to
understand what has happened

– The long-term relationship an organisation enjoys with an outsourcer
ensures consistency of advice

– An HR outsourcing service will typically work across a variety of HR functions
in an organisation. This gives it a wider perspective on employment-related
issues, and it will be able to address these issues in the context of the
employer-employee relationship

5. Developing your employees

Training and development of staff is one of the most common areas to be
outsourced to training and consultancy companies or individual consultants.
However, giving this responsibility to an HR outsourcing provider holds
distinct advantages. These include:

– It is involved in a long-term relationship with an organisation. It is
working with that organisation every working day of the year, and so has a
privileged insight into training needs

– It is in a unique situation to evaluate the effectiveness of an
organisation’s solutions as it is in place to see any potential fall out. It
will see, first-hand signs, for example, such as increased resignations and
overworked employees – indicating training is not working as a retention
strategy, and is not helping staff to manage their workloads effectively

– It remains fully involved with the client across all HR areas after a
training solution has been delivered – it can follow up on further issues
raised by the training or development, and is available for further information

6. Recruitment

Recruitment is another area that is commonly outsourced, generally to
recruitment agencies. The advantages for outsourcing recruitment processes –
including advertising services, recruitment interviews, assessment centres – to
an out- sourcing provider instead are:

– It runs the process from start to finish, ensuring consistency throughout.
Typically, when an organisation works with a recruitment agency, it will
provide a profile and job specification and an outline of the company’s
culture. The recruitment agency will then recruit based on this information.
Once the candidate is appointed, the agency disengages. But an outsourcing will
work with the line manager to create the job and person specifications, and
have a clear understanding of the company’s culture. It can handle all aspects
of the process including taking up the references – an increasingly important
skill, which ensures any potential grey areas of a reference are investigated

– Outsourcing providers have expertise in a wide range of recruitment
techniques such as assessment centres, psychometric tests and personal

– Once the appointment has been made, the same people will then be
responsible for the induction, development and ongoing welfare of the new
employee, ensuring recruitment decisions are carefully considered

7. Operational management

This service can provide an organisation with access to a team of qualified
HR professionals -often through a helpdesk facility – who can give advice on a
range of issues such as:

– Ensuring legal documents remain up to date

– Ensuring organisations follow best practice

– Enabling employees to access best practice HR advice

– Providing meaningful and timely management information

8. Administration

An administrative service, using the latest technology, will provide ongoing
support to implement HR practices for an organisation. For example:

– Producing contracts of employment

– Writing offer letters

– Monitoring maternity/paternity benefits

– Dealing with employee termination or retirement

– Continually updating personnel files.

Integrated HR outsourcing

It is possible for companies to work with a single integrated HR outsourcer
to deliver the broad range of services it requires. The key in using an HR
outsourcing provider, rather than individual specialist suppliers such as
recruitment agencies, is the long-term partnership the outsourcing provider and
client can form. As well as the consistency of data between one HR service and
another it also saves the company’s remaining HR function from having to manage
multiple suppliers which is not their area of expertise and would detract from
fulfilling their strategic role.

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