What are the top signs that your company is ready to outsource its HR?

Here are some hints :

1° When you have an exact and deep view of all your HR processes and know exactly what you do best and what can be improved by an external expert

2° When you have done your best to improve efficiency & quality in your HR processes and reduce the HR operating costs and now the next step on the ladder is Outsourcing for more quality, efficiency and cost savings

3° When you know exactly your objectives when outsourcing and that you are ready to undertake all the internal changes that this strategy will need and generate

4° When you are ready to work hands in hands, on a long-term basis cooperation with an external expert

This question can be taken two ways, so I will give two answers.

If you currently have a HR department: they are being consumed by paperwork, processes instead of strategy and contributions. Outsource repetitive work that can be done by someone on the outside.

If you don't have an HR department: you are as the owner or director are spending more time on employee paperwork, trying to determine your benefit plan, how to keep employees engaged - get a consultant or outsource to have the proper guidance and eliminate the less-than-productive tasks.

There's only one sign that matters, and that's whether or not your core business is HR. If it isn't, then you should be considering how to outsource it.

I'm sure there will be people who disagree with me, so let nail my colors to the mast. In the new world of work, there are two categories of activities in any company: those that produce value and those that don't. Value is defined by what your customers pay for.

If HR is your core business, then your customers pay you for your HR services. The HR you do for your own company is part and parcel of that core business. But, if your core business is anything else, then it means that you are spending some of the resources available to you for creating value on activities that you can't sell to the customer. That makes them non-value, or non-core business.

I'm willing to be convinced otherwise, but it seems to me that, apart from the exception I've already mentioned, the only companies that should do their own HR as a non-core activity are those whose incomes are too small to outsource it. In other words, it's cheaper for you to do it, even though it means that some of your resources are being diverted from your core business.

One thing that's key in the outsourcing process is to have a solid and shared definition of the processes to outsource. A long time ago, a client outsourced a wide range of HR processes to a very capable vendor. Where the outsourced processes were well-understood by the company, the transition to the outsource provider went smoothly. Responsiblities could be defined clearly and the company could measure whether or not the vendor was performing well.

Where the company didn't have defined or consistent processes, the outsourcing relationship stumbled seriously. We all had to re-group, redefine the processes, establish responsiblities, even build some new tools and then re-implement the arrangement for these processes.

Lesson learned!

If you haven't brought anything to the table that your CEO (a) can't read about in Forbes or WSJ; (b) can't calculate on the back of an envelope; or (c) thinks is 'common sense', your job is transactional and an excellent candidate for being outsourced or offshored. Ask yourself this question: Am I bringing business value the company can't get cheaper/faster/better from another source? If the answer is no, you need to change - before your job is gone.

Whether we're talking about a small company with a non-existent HR department, or an established HR department with extensive centers of expertise, I think the decision to outsource any HR function is largely dependent upon corporate culture and values. The risks of outsourcing versus the boost in efficiency and/or cost savings should be greatly scrutinized in terms of the potential impact on morale, retention and productivity of employees and managers, as well as the company's ability to change/adapt quickly. Senior leadership should evaluate how existing internal HR is adding "strategic value" to the corporate mission and strenghtening it's culture. Outsourcing should also be weighed in terms of other recent or planned changes within the company, for which outsourcing may have a negative effect. As I've read in some of the previous responses, cost savings alone is usually a poor reason to outsource any functional area of HR.

Every company needs Human Resources, for the small to medium sized company the sooner you outsource to senior leavel Human Resources consultant the better. Outsourcing allows the organization to get a senior level human resources professional at a price you can afford. Your looking for someone that has run HR for companies, and has experience with Governmental agencies, employment law, etc. Hiring a HR Administrator, or even manager usually is going to cost more than outsourcing and they do not have the level of experience to make a difference in your business. Trying to give HR to the controller

The organization needs to build infra-structure that will ensure they are in compliance with employment law. The sooner they get help the better. The employer needs help building a workplace that does not violate employment law. Normally, when I audit HR practices, I find thousands of dollars in exposure in wage and hour violations. The thing I explain is I can reduce the exposure going forward but what is already there has a life cycle of 4 years. Once you have the compliance aspects under control, By outsourcing you have a experienced professional work on building the attraction and retention model. Usually not where the CEO wants to spend time. However talent is what makes your company successful. Keeping the talent after training and developing them is critical to your business.