7 Benefits of Outsourcing HR Services

While business leaders collaborate with HR, they often only have direct experience or knowledge of what it entails if they hold HR-specific roles.

Many business leaders find HR matters challenging. It’s understandable; HR is a huge field and there are all kinds of complexities to navigate, from building a great onboarding strategy for new employees to ensuring compliance with federal, state and local regulations. Because of that, HR is a responsibility most business leaders prefer to delegate. In a small to midsize business, that responsibility might fall solely on a small team – or even an individual.

So when HR needs increase beyond a company’s capacity or ability, or when the resident HR expert moves on, leaders can find themselves in a difficult position.

Imagine you’re the managing partner of an up-and-coming law firm. As business growth ramps up, the HR director – who has been running the department mostly by herself – resigns. Now the managing partner is left dealing with:

• Time constraints due to the significant number of day-to-day HR tasks like payroll processing, benefits and compliance management
• Compliance risks due to lack of expertise in employment laws and regulations
• Employee dissatisfaction when requests are not handled quickly or effectively
• An absence of strategy because they lack the time, expertise or resources to set and support additional HR initiatives

The managing partner has several options. She could continue to struggle, handling HR herself until she’s able to recruit a new HR director, and risk stretching herself thin and underperforming in her leadership duties. She could assign these HR duties to someone who lacks the depth of knowledge and experience to fill this gap, leading to the department falling behind and potentially running into serious compliance issues.

Or, she could outsource HR, relying on an experienced HR consulting team to fill the gaps and build a more sophisticated HR program – freeing her to focus on what she does best: growing the firm.

Finding The Right HR Outsourcing Company for Your Business

HR outsourcing solutions are not one size fits all (although some do purport to be). The best path forward is to find a flexible but comprehensive outsourcing partner that can adapt to your company’s goals and needs.

Outsourced HR consultants offer in-depth expertise and are a more cost-effective solution than other HR outsourcing options, like professional employer organizations (PEOs).

Larger firms with more resources – like James Moore – also offer great flexibility in tailoring their services to client needs. As a result, their clients can outsource the services they need the most help with, avoid paying for solutions they don’t need, and adjust their packages as their needs evolve.

Ultimately, the best HR outsourcing partner is the one that supports your organizational goals and allows you to grow. Whether that means bringing in a fractional HR director to lead your internal team and build out new initiatives or just having an experienced advisor you can call when problems come up, the right HR firm will meet your business where it is.

Why Outsource HR? 7 Advantages to Consider

When you outsource elements of your company’s HR, the results of your partnership depend mainly on your goals for the engagement. For example, a company looking for a fractional Chief HR Officer (CHRO) to establish and optimize its HR policies will measure success differently from an overburdened in-house HR department needing extra hands.

Here are seven advantages any company might experience if they work with an outsourced HR consultancy like James Moore’s HR Solutions team.

#1: Access to Expertise

Outsourcing to an HR firm grants companies access to specialized expertise. These firms have practices dedicated to human resources and employ accomplished HR professionals with hands-on experience and in-depth fluency with labor laws, industry regulations and other best practices.

Companies leverage this expertise in many ways, particularly for:

• Strategic partnerships: A collaborative partnership with experienced HR professionals enables businesses to optimize their current HR practices and build more robust long-term HR strategies.
• Internal HR development: Outsourced HR leaders can strengthen internal teams through training and guidance and assist in attracting and hiring top HR talent.

By tapping into this expertise, businesses can navigate complex HR challenges more effectively and drive organizational success.

#2: Risk Mitigation

HR consultants maintain in-depth knowledge of employment-related laws and regulations that could trigger compliance issues. They are also skilled in identifying potential HR risks and implementing measures to mitigate them. Here’s how:

• Compliance support: HR consultants bring fluency in recent changes to labor laws and industry standards, allowing them to help businesses avoid penalties.
• Proactive risk management: By leveraging consultants’ practical experience supporting, leading and building HR teams, businesses can identify potential problems early and create processes to address and prevent them.

When businesses proactively manage risks, they can protect their reputation and avoid costly legal issues.

#3: Cost Efficiency

Outsourcing to an HR consulting company can result in significant cost savings. For example:

• Flexible pricing models: Consulting firms like James Moore can customize their solutions to businesses’ needs and budget constraints, allowing businesses to maximize the impact of their spending.
• Reduced overhead costs: Businesses can avoid the expenses associated with hiring and maintaining an in-house HR team.
• Avoiding penalties and inefficiency: By leveraging consultants’ expertise, businesses can build better HR policies and avoid penalties for noncompliance. Additionally, their experience in building and analyzing HR departments enables them to spot and address inefficiencies quickly.

These cost savings allow businesses to allocate resources strategically and maximize their return on investment.

#4: Improved Employee Experience

Outsourcing HR functions can significantly improve employee experience, especially if the company lacks a formal HR department or needs additional support through fractional leadership. Specifically:

• Implementing HR best practices: HR consulting firms have in-depth knowledge of general and industry-specific HR best practices. Implementing these can improve both long-term strategy and day-to-day HR functionality.
• Addressing employee concerns: Outsourced HR firms often handle employee grievances more promptly because they have additional resources. This improves employee satisfaction and helps eliminate potential problems.

HR is critical in how satisfied employees are with their roles. High employee satisfaction can reduce turnover and make the organization more attractive to top talent.

#5: Scalability and Flexibility

Human resources outsourcing companies scale their services to clients’ needs, allowing them to serve each client on their terms. For example, a law firm that needs a fractional HR director wouldn’t want the same service package as a company that only wants to outsource payroll and benefits. HR is anything but a one-size-fits-all type of service, and it’s crucial your organization gets a bespoke approach.

These tailored services could be expanded or reduced in both cases as the client’s needs shift, including:

• Bringing in additional support temporarily to cover an unexpected gap
• Gradually reducing services as they build up internal HR infrastructure
• Scaling up their outsourced HR as the company grows

As a result, businesses can remain agile and responsive in dynamic market environments, confident that their HR team can keep up.

#6: Enhanced Focus on Core Activities

When an established company leader takes over the HR functions for the business, it reduces the time they can spend focusing on their primary responsibilities. This distraction can have an even bigger impact when that leader is the CEO, given their crucial role in the company’s continued growth. And since the CEO likely wasn’t an HR expert in the first place, the HR function also suffers.

By contrast, if they outsource, the company could see:

• Streamlined operations: Consulting firms are skilled in managing and optimizing administrative HR tasks, compliance management and employee relations issues, making HR processes more efficient.
• Leadership prioritization: Without the distraction of a secondary HR role, leaders can focus on their key priorities, like strategic planning, product development and financial management.

When leaders are able to focus their efforts, organizations can drive more sustainable growth without risking burnout.

#7: Attracting & Retaining Talent

HR consultants can diagnose issues impacting employee retention and recommend fixes. By improving employees’ experience in their current roles, companies become more attractive to top talent in their industry, boosting recruitment.

Here are a few ways they might accomplish this:

• Employer branding: HR consultants may work with businesses to identify and optimize their employer value proposition (EVP), launch employer advocacy programs and other initiatives, and improve the overall candidate experience.
• Employee engagement: Consultants can identify barriers to employee engagement and create proactive strategies, including work-life balance initiatives, employee recognition programs, improving communication and development programs, and more.
• Compensation benchmarking: HR consultants bring an objective perspective, allowing them to analyze compensation and benefits realistically. For example, they might assess your benefit packages, set benchmarks, develop custom rewards programs or establish performance-based compensation plans.

With improved employer branding, happier employees and stronger compensation, organizations can attract top talent and win their loyalty.

James Moore: Experienced Outsourced HR Consultants

Outsourcing HR services to an experienced consultant – like those at James Moore – grants businesses instant access to strategic expertise and comprehensive support. As a result, those businesses can safeguard against risk, improve their cost efficiency, attract and retain top talent and more.

Choosing the right outsourcing partner is vital. With the comprehensive support of an established firm and the personalized attention of a dedicated HR advisor, you can create a tailored strategy to address your HR pain points and set your brand up for growth.

To learn more about how James Moore can guide your HR department toward success, contact an advisor today.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.