Key things to consider before outsourcing HR operations, and after
With continuously changing business conditions and VUCA (that is, Volatility, uncertainty, complexity and ambiguity) business climate, it has increasingly become mandatory for the companies to not waste their time in the non-core activities. In context of HR functions too, this statement holds very true. May it be payroll or benefits or compensation management, managers and directors do invest their precious time in these necessary but time consuming operational tasks.
One of the solutions that helps businesses to focus on revenue generating strategic aspects of their businesses than operational non-core processes is to outsource some or all of their HR functions to third party providers. So if you are already out of that self-flagellating mode trying to fight the assumption that ‘nothing in HR is non-core enough to be outsourced’, welcome to the reality now.
Any smart outsourcer, worth his money invested, will warn you of some common pitfalls. Here’s what you need to brace up for:
1. Fitment with your long term HR Operating Model and Strategy
Before deciding to outsource – it is important to review your overall operating model and HR service catalogue –which are most essential to running the business (e.g. Payroll, Recruitment) and those which might not be worth the effort? You need to review the capabilities you will need within your organization (HR Strategy, Analytics, Succession Planning, etc.) moving forward and which are fine outside. The outsourced HR services need to be forward looking and aligned with your long term HR Strategy, whether the focus is on improving the new talent economy.
2. Re-stack Hay while the sun shines
Outsourcing is a good excuse to have an unrelenting frank look at your processes. Re-wire them, not just because they are going to be shipped, but also because probably they have been on hold for long. It’s time for new and apt processes to sink in.
3. Beyond the Boundaries
With geographically dispersed employees, back offices present across multiple countries, varying regulations and ever-changing legislations, HR outsourcing vendor should address the needs from integrated HR outsourcing solutions or complicated multi country Payroll/Tax services and other labor intensive processes to handling benefits and Compliance services across the globe.
4. Risk is the new cookie
Milk or cream, that’s your choice but either ways it is clearthat both yummy and unpalatable sides of an outsourcing arrangement have to be shared between the two entities. In fact, the way SLAs are being negotiated and structured heralds path-breaking, outlier models of how partners take on penalties, guarantees, risks and other baggage items in an outsourcing handshake. Look around for options, consider your context and priorities and work out the best equation on-paper and on-ground.
5. Assumptions are costly
It can be irresistibly easy and lazy to assume ‘who will take care of what’. Specially between a syrupy pitch-meeting and a buoyant contract signing party. This is here where clarifying the air with the right talk takes on a serious relevance. It can of course be unpleasant and make you run the risk of appearing picky but it is in the interest of both the parties to be on the same page. Make sure your outsourcer is clear, affirmative and candid about all the process-expectations, warts and all.
6. A stitch in time, saves nine T-shirts
Most outsourcing equations stand on the precipice of slippery hand-holds. Integration is the most neglected, and yet the clincher, of a process sourced elsewhere. It has to be routed well and knitted deeply into critical functions or existing legacy that an organization is running. You, as HR manager, adorn the role here to ensure new-process-connect-knobs move well with what’s laid out back home and in a non-mash-up manner.
7. You merely throw the duty apron, not the accountability cap
Walking her up to the aisle is not equivalent to washing your hands of every next-problem. Finding a suitor for your process is hardly the ‘happily-ever-after’ you might have imagined. Your service provider is definitely obliged to observe the clauses and deliverables in the contract but that, in no way frees you of the final accountability cap. It is you, and only you (to be cruel), who ultimately still wields the real burden at the altar. You still have to ensure that your plan fits the business big picture well and is not a spanner at the wrong time.
8. No under-estimating Governance
For many sourcing away a process or function is tantamount to opening a can of worms. You can turn those slithering, crawling-slowly-but-steadily things into earthworms if you are vigilant and clear on all governance aspects, accessibility chain, request-cycle points and people with well-defined roles.
9. Obvious yet Omni-potent: That Buy-in
It is your prerogative to put in actual, active, passionate, unprejudiced acceptance of the sourcing change inside your organization. People will be displaced, jobs may be affected, habits would be uprooted, management wallets would be loosened so yes, it’s almost big change across the organization but you can always deal with it. Being a HR expert with your career built on understanding people and their deepest fears, this should be, err, a no-brainer.
Make your outsourcing work to its fullestHR outsourcing solutionslevel. Iron out all those adjacent issues with some insight and foresight. And remember, you can never be sure of what happens next, so be ready to take every challenge in the right perspective.