Internal Human Resources versus HR Outsourcing

Nov 17, 2000 (Updated Nov 19, 2000)

In today’s competitive work force, Human Resources is not just about maintaining personnel files and recruiting employees. Human Resource professionals are strategic business partners, and can be a major factor in the company’s success (or failure). As a result of this demand, there may not always be time to implement every project internally. With that in consideration, strategic human resource planning must be implemented.

There are several advantages and disadvantages of outsourcing Human Resource needs versus creating internal programs. In order to determine whether or not you need to outsource an external consultant or Human Resource provider, you need to quantify your human resources purpose in your organization. I am riding the fence on this issue, because as a human resources professional, I have the experiences from both playing fields.

Temporary Agencies:
Outsourcing temporary employment can be a great way to fill a companies needs during busy times, and to cover vacations or leaves of absences of existing employees. In addition to for screening applicants and selecting candidates, most temporary services are responsible payroll, unemployment compensation, and bonding (if for example, the temporary employee damages company equipment or property). The disadvantages to hiring temporary employees are that you may not get the commitment of a regular employee, and temporary agencies can be costly (at an average mark up of 35%-40% per employee).

In my own experience, I have good luck with temporary employees (when I have hired them on as a permanent employees) and bad luck with temporary employees (when an agency sent over an employee who I had previously fired). The experience depends on the quality of the temporary agency. Overall, I have had better luck with Manpower, than with Kelly, Interim, and Snelling in my local area.

Recruitment and Selection
Outsourcing recruitment can be helpful in the screening process, if your company has the resources to do so. However, keep in mind that this recruiter/agency represents your company in all aspects, so if they ask inappropriate or illegal questions during the interview process they are your representatives. I have actually had a couple recruiters ask me some odd or illegal interview questions, and I wondered if the company had any inkling about their process. So, on this note, be very selective about the person or firm that you have recruiting or selecting candidates. You are only as strong as your weakest link!

There is software available to create job descriptions, sample policies, write performance reviews, and other such time consuming tasks. There are some samples that free (HR and some more expensive ones (Descriptions Now). Some of these tools are great to use as resources to save time, but be cautious of some of the “free demos” that you may be billed for later.

Another factor to beware of when purchasing HR software is aggressive sales representatives. I am president of a local human resource organization, and I get several calls per week from vendors trying to target our membership with some of these “free demos”.

In my experience, the following type of Human Resources orientation programs tend to have more credibility when they are conducted internally, because internal representatives seem to have a better understanding of the company’s policies, mission, culture, values and overall objectives.
• Employee Benefits
• Documentation and Discipline
• Policy and procedure
• Performance Management (which is usually organization specific training)

However, the following types of training programs can be successful conducted internally or externally, depending on your company’s time, resources, and organizational demand:
• Performance Appraisal Workshops
• Coaching and Counseling
• Time Management
• Sexual Harassment
• Managing Diversity
• Employee Relations (If it is an adversarial work environment, it is sometimes better to have an outside consultant conduct this training)
• Paradigm Shifts (outside consultants sometimes work better doing type of training, as well, especially when there is an organizational change or merger involved)
• Management Development

A primary goal of a Human Resources professional is to strive to help employees and the company reach unlimited potential. Remember that your contributions, whether they are outsourced or internally developed, add to the success of your organization. Choose your time and resources wisely.

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