Management 101: Outsourcing vs. In-house HR

In terms of HR management, you have options. You can either manage it yourself or hire someone from your organisation. For a workload-sharing chance, you can also outsource HR to a partner. There are benefits and drawbacks to each choice.

As a business owner, you should understand that employing staff entails a variety of commitments. You will have a lot on your plate: payroll, hiring, onboarding, rostering, training, attracting top talents, and most of all, creating a healthy workplace culture

That said, human resources are responsible for these and other tasks. You and your team can concentrate on supporting the growth of your business when your HR department is handled effectively. Ideally, you would have a couple of HR managers and a dedicated team to oversee your HR department. However, this isn't always the case in smaller organisations with tight funding. 

Additionally, even if you have an HR staff, there are arduous jobs that demand more time or skill than the team has available, delaying other high-value operations. This post will discuss the benefits and drawbacks of handling in-house vs outsourcing HR.

Managing In-House HR 

An umpteen business owners choose to hire someone to do HR duties full-time or add it to an existing employee's responsibilities. However, there is a third option, wherein you decide to manage HR independently.

If you're in charge of HR, you'll need to commit a lot of time to HR-related duties rather than other high-value plans and projects. Likewise, if you assign an employee to handle HR, they must split their time equally. So, no matter who is in charge internally, your company alone is responsible for all employee-related issues.

If you're the one in managing, keep in mind the following:

  • Less time available for strategic planning

You understand what it's like to wear multiple hats as a business owner, particularly at the start of your business. However, if you continue to manage HR on your own, you will have less time to concentrate on business plans, projects, and goals. 

  • The workload is constant

Employer rules and regulations alter as your business grows and employs more workers. Consequently, you will need to modify your HR policies to manage benefits, onboarding, and terminations for each person who joins or leaves your workforce.

  • You can't necessarily solve everything with just an optimistic attitude

Managing HR yourself may seem like a smart move, but it isn't. When an issue arises, you suddenly have to commit more time to solve it than you can reasonably spare. Presuming you have the knowledge or access to it to solve the issue correctly.

  • You undertake all liability

You are entirely responsible for any employee-related legal obligations and compliance requirements. Also, it could have a significant impact. The risks are substantial if you don't know the ins and outs of HR regulations and workplace legislation.

Managing your HR is possible if your business is still manageable in size. However, you can consider human resource outsourcing to a local partner if your business expands beyond five to ten people.

Photo by: Mikhail Nilov | Pexels 

Outsourcing to a Local HR Partner

When your company is prepared to outsource, there are various indicators. If outsourcing HR is a concept that's new to you, it's just like this: you hire a third party to handle HR-related responsibilities and roles instead of doing it yourself. 

Compared to internally filling several HR roles, outsourcing gives you access to specialised expertise and specialists to complete your HR needs. 

You should collaborate with a committed, local HR partner to ensure your employees are looked after and fairly compensated, that your staffing needs are met, and that your workplace issues are addressed.

Further, they can assist in making sure your company remains relevant and compliant with constant changes in terms of regulations. Even if you have a well-equipped internal HR team, you can still drop and merge several HR functions with your partner, allowing everyone to concentrate more strategically.

When it comes to outsourcing HR, keep the following in mind:

  • Vital but non-foundational work gets done 

IT, legal, and accounting services are essential to your company, yet they may not be your sole goal for HR. You free up your time and your employees' time when you outsource HR and other practical but crucial tasks to the pros.

Make use of this moment to carry out your business's crucial functions and develop a strategic growth plan.

  • It doesn't matter how big your company is

Outsourcing HR can be advantageous for small-to-medium-sized businesses and two-person startups. You should assign particular daily challenges and duties to the most qualified employees if you want your business to thrive.

This strategy is particularly effective if your business is smaller and you have fewer employees and resources. 

  • You have less administrative work to do

It takes ample time, perseverance, and the ability to manage many back-office tasks, such as payroll, benefits, and workers' compensation claims. You also need the right technology to automate these processes and reduce paperwork. 

Human resource outsourcing any or all of these HR-related duties to a partner reduces the administrative load.

  • Employee benefits are less expensive

The time you would spend organising and administering your employee benefits package is reduced when outsourcing these tasks to an HR partner. It also rewards you with lower benefit costs and often more significant benefits. 

While offering a group discount that you wouldn't otherwise be able to obtain, your HR partner can do the research and labour-intensive tasks for you.

  • Being sociable is still possible

There may still be individual engagement in your organisation even when many of your HR tasks and duties are outsourced. You can still hire someone internally to handle the fun people-focused HR tasks even without the heavy workload. This could be you or another employee.

Key Takeaway 

There is a significant difference between delegating your HR task to the pros and doing it yourself. However, you can minimise problems, reduce risks, and save money when collaborating with an HR partner with expertise across different fields. 

You can focus your time and effort with your team on the high operations that boost revenue and expand your company.

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Have Questions?

We Have The Answers!

What is the primary benefit of outsourcing HR?

Outsourcing HR allows businesses to access specialised expertise, ensure compliance with regulations, and handle HR tasks efficiently. This helps companies focus on core activities and strategic growth.

What are the drawbacks of managing HR in-house?

In-house HR management can divert time from strategic planning, increase constant workload, and raise legal risks if regulations are not followed correctly. It also requires ongoing adjustments as the business grows.

How does outsourcing HR reduce administrative work?

Outsourcing HR handles tasks like payroll, benefits administration, and compliance, freeing up time for business owners and reducing the need for extensive paperwork and technology investments.

Can small businesses benefit from HR outsourcing?

Yes, HR outsourcing is beneficial for small-to-medium businesses and startups. It helps manage HR tasks efficiently, allowing limited resources to focus on core business functions.

How does RosterElf improve rostering and payroll management?

RosterElf’s cloud-based software simplifies rostering and payroll by allowing employees to update availability via an app. It automatically suggests available staff for shifts, reducing conflicts and administrative workload.

Important Notice

The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on RosterElf's interpretation of laws existing at the time and should not be relied on in place of professional advice.

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