You Know You Should Be Outsourcing HR When You Run Into These 7 Problems
Small and medium business owners often delay outsourcing HR because of the perceived loss of control or the perceived costs involved.
Both reasons may be misguided. Once you’ve reached the ‘tipping point’ when it is no longer cost-effective, time-effective or productive to look after your own HR in-house, continuing along the same path may hold your business back.
Trying to look after recruitment, orientation, conflict resolution, policies and procedures, and training by yourself or even with a trusted assistant at your side, may be a false economy. It can damage your business’s prospects.
But how do you know when you reach this ‘tipping point’? What are the tell-tale signs that your business would be better off seeking external help?
From my experience, there are seven common signs that a business is creaking under the burden of in-house HR and should be looking for external solutions.
These are described below.
1. You’re spending way too much time finding candidates & interviewing.
As the boss, you want to be in control of who’s coming into the company. That’s understandable – but it doesn’t mean you have to do all the legwork.
If you’re writing the ads, screening CVs, conducting interviews, and all the rest, it can really eat away at time that would be better spent on strategically growing the business.
Wouldn’t it be better use of your time to sit down with the best and brightest candidates after they’ve been screened and selected by professionals?
2. Your employee turnover is too high.
This is obviously closely connected to the first point: if you’re always interviewing, it either means that your business is growing very rapidly or that people are frequently leaving it.
Either way, it’s a potential red flag. The latter means that you may not be hiring the right people in the first place, the company culture may be causing them to leave, or they simply have better opportunities elsewhere.
‘Employee drain’ can severely damage a business and needs to be addressed. Specialist HR people can help you get the right people in the right positions – and keep them there – so that your employee base remains stable. This can only be good for business.
3. Teams are not performing to expectation.
Employees underperform for a myriad of reasons but most of these reasons can be connected back (directly or indirectly) to HR.
They may not have the required skills; they may need more training; leadership may be lacking; they may lack motivation or incentives; the working culture may not be conducive to high performance… and so on.
If performance is consistently sub-standard, it may be a sign that HR is not doing its job effectively. The finger tends to get pointed at the employees themselves but, by outsourcing to HR specialists, you may be able to start addressing some of the underlying problems that affect performance.
4. Your workplace culture is full of conflict.
Has your workplace turned toxic? Business owners are sometimes the last people to realise this because they are on the inside looking out; often, you can’t see the wood for the trees.
If there is persistent conflict between people, departments, and leaders, or too much competitiveness and division, this may point to problems with the underlying culture. This damages the business because it creates high turnover of employees and customers start to feel the negative effects of the toxic environment.
It’s at this point that many business owners suddenly raise the white flag and admit to needing help. Experience in employee relations, conflict resolution and mediation can go a long way to solving these issues and preventing the existing problems from becoming more deeply embedded.
5. You are struggling to meet workplace regulations.
Regulations change frequently and it can be challenging to keep abreast of all the updates relating to recruitment, employment, payroll, and so on.
Failure to comply can be serious – as some Australian franchises have found out recently.
The complexities of compliance should be part and parcel of an HR professional’s remit, so if you are struggling to keep up, seek external help before you expose yourself to the risk of fines or legal action.
6. Your leadership is weak.
Poor leadership is another of the problems affecting businesses without a good grip on HR functions.
This is often a result of poor hiring decisions and inadequate training and development initiatives: either the right people are not being brought into the business or they are not being developed into leaders who can inspire and motivate others.
Fixing HR can help fix the leadership problems, which can have a positive knock-on effect through all levels of the organisation.
7. Your personal life is suffering.
You only have one pair of hands. Yet you’re juggling many of the HR functions (recruitment, compliance, training, etc.)
The amount of time you spend in the business is already affecting your personal life: less time with your family and little time to enjoy the fruits of your labour.
If you want to grow the business and get some of your own time back, it’s time to offload the administrative responsibility of HR onto trusted shoulders of HR professionals.
Remember, there are certain tasks in the business that only you can control: strategic decision-making about growing the business and developing the vision and direction of the company, for instance. If you’re still managing HR, you can’t be working on these key areas too.
As a business owner, you’d probably never dream of configuring a server, preparing statements for the ATO, or designing a brochure yourself. You outsource to IT, accounting, and design specialists.
HR should be no different. As most business owners quickly find out, it’s very time consuming, involves a wide range of areas requiring specialist skills, and can most definitely keep you awake at night!
It’s now much more practical and affordable for small businesses to attain the benefits of outsourcing HR, which used to be reserved for the corporate world.
If you find yourself nodding at any of the scenarios above, it might be time to give us a call.