HR is becoming more specialised and the outsourcing of some aspects of the
HR function is increasingly common among organisations.
Research in the latest edition of Analysis of Personnel Activities and Costs
(APAC) highlights some serious trends that are having a growing impact on the
whole nature of HR in better performing organisations.
First, there is a move to quality through increasing professionalism and
specialist provision of HR services. Second, associated with this trend,
outsourcing of HR in whole or part has, whether rightly or wrongly, captured
the imagination of successful boards of directors.
The first trend identified can carry substantial benefits for the astute
board. The APAC database includes an example from a 600-strong organisation
that two years ago employed one HR manager, two personnel/training officers and
four clerical/administrative support staff at a headline cost (in base salary
terms) of £160,000.
Latest data indicates that at a cost of £120,000 there are now three
specialists; training, recruitment, remuneration and one administrator. This
reduction in HR numbers has coincided with an almost 20 per cent surge in
profitability.
Assessing the HR input requirements of the organisation is central to
deciding the nature, balance and intensity of service that is appropriate. Line
managers can always provide the necessary insight into what is needed to
support the business most effectively.
An HR service and effectiveness audit is central to discovering these needs.
It should be noted that such an audit emphasises the need for professionalism
and underpinning legal requirements.
Outcomes vary from, "We can do all that is needed ourselves" and,
"We don’t have time to do any of this and need high quality, accessible HR
input" to, "We have no faith in the effectiveness of our internal HR
services and would like to buy in the necessary support."
Clearly the statistics indicate that professionalism and quality – whether
internally or externally provided – are winning through. Benchmarking studies
show, however, that fewer than 50 per cent of organisations are actively
measuring their performance and effectiveness in HR delivery.
All the indications are that, with increasing frequency, under-performing HR
functions are having change forced upon them.
By Derek Burn, Partner, MCG Consulting Group
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