Numerous companies have popped up offering remote human resources services as an alternative to the traditional on-site HR department. Particularly for small businesses, going with one of these for at least some HR services makes a lot of sense, given the business’s lack of overall resources and perhaps its inability to support full-time employees doing these jobs on-site. However, employees at small businesses sometimes suffer when the business decides to outsource all HR tasks. Therefore, businesses need to strike an appropriate balance between outsourced work and maintaining an on-site human resources employee or team.
Benefits of outsourcing human resources
A small business doesn’t need an HR department at all when it’s just the owner who is working there. An accountant can take care of setting up the payroll, and the owner can choose his own benefits. However, as the business grows and adds employees, the owner will often choose to outsource HR duties rather than carrying them out himself or hiring a dedicated HR employee. This move has several benefits for the business and employees:
- There’s increased efficiency for the business because it doesn’t need an HR generalist to manage everything from recruiting and onboarding to complaints, payroll and time off requests.
- Better services for employees, who may be able to get direct deposit, online time and attendance, and other tools that wouldn’t be cost-effective to manage with a small on-site HR department.
- More time for the business owner to manage the business rather than trying to manage benefits.
Why to keep a physical HR department
Although it’s possible to outsource all aspects of HR, this isn’t the wisest option. The benefits of outsourcing HR aren’t cumulative. On the contrary, the business often benefits from having at least one HR staff member to manage the HR functions and provide a point of contact for employees. The business as a whole can benefit in several ways:
- Employees can go meet with familiar HR staff face to face rather than having to call a phone number to talk to a call center employee.
- The on-site HR department can manage the business’ specific HR needs and keep a focused perspective on services, particularly as they relate to hiring and training new staff. Someone on-site will know the business’ needs much better than an outside rep would.
- Employees in an HR department will be much more motivated to do their best work to promote a healthy workplace. Outside companies, on the other hand, aren’t as familiar with the company’s workplace and can do little to affect morale and work conditions.
It makes a lot of sense for small business owners to outsource at least some of their HR responsibilities. However, business owners should also have a point person in the office who is responsible for HR. In addition to managing the outsourced services, this person can be the human point of contact for employees who have questions about benefits and legal HR matters. The on-site HR staff can also help with training, interviewing and other HR responsibilities that do not lend themselves well to outsourcing. The whole business will benefit from this arrangement.