10 Tips for Outsourcing Your HR - dummies

By Marc Bishop, Sharon Crooks

If you are thinking about outsourcing your HR support, with so many HR providers in the market you may wonder which one is right for your business. Here are some top tips for what to consider before you take the plunge.

  • Check the contract length.

    A multi-year contract always benefits the supplier not you. You have no way of knowing what your requirements are going to be over the medium to long term – they could easily change from one month to the next. Instead, look for a contract that’s no longer than a year and includes flexible terms, like an hourly or monthly rate that reflects your use of the service. That way you won’t end up paying for services you don’t need or use.

  • Don’t base your decision on fear.

    Employment law can appear complex and employment tribunals are expensive, so you might think that buying tribunal indemnity insurance is an easy way to gain peace of mind. The reality is that there are many steps in the journey to an employment tribunal, and an employer who has sensible HR policies and procedures in place, and follows them, is at a very low risk of losing a claim. If you choose a supplier just because they offer tribunal indemnity insurance you could be paying an unnecessary premium.

  • Check if the HR support number is for a call centre.

    What does the supplier really mean by ongoing HR support? You wouldn’t take legal advice from a call centre, and you shouldn’t take HR advice from one either. When you speak to a call centre there’s no guarantee you’re getting a HR advisor trained in the area you’re querying, and you’re certainly not getting an advisor who knows your business well enough to offer tailored advice.

  • Ask if you will speak to the same advisor every time you get in touch.

    Effective support is rooted in an ongoing relationship. You should have a named advisor or team of advisors who work with your business and who know you, your company and your objectives. If you speak to someone new every time, you’re always having to start at the beginning, and it makes for slow, arduous progress.

  • Confirm if the service includes face-to-face meetings.

    You should be able to have a face-to-face meeting whenever you want one – it’s the most effective way for your advisor to get a full understanding of your company culture, or of a particular issue. Avoid providers that restrict meetings simply to keep their own costs down.

  • Ensure the core HR support package and any additional costs are clear.

    Many providers will only give you basic and ‘safe’ HR advice, leaving you to assess the risk and decide what action to take. If you are outsourcing HR to save yourself some time, this doesn’t help you at all. You will get frustrated with a provider that ‘sits on the fence’ or tells you what you can’t do, rather than what you can do. Ask if the provider will draft meeting scripts and letters for you or make an advisor available to help you with a difficult disciplinary issue, for example. Make sure you’re very clear about what is and isn’t included, and what service will incur extra charges.

  • Ask how the HR administration will link in to payroll.

    Some HR providers also provide payroll services, but if they don’t, you need to ask how their HR administrators will work with your accountant or payroll provider. If the processes are not clearly agreed, people will make mistakes and your employees will be knocking on your door to complain. Ask if their pricing is fixed, or if it is based on the number of your employees. If you are planning to grow fast, you may end up paying more than you expected, particularly if you are tied into a long term contract.

  • Ask how your employee data will be managed and stored.

    It’s your responsibility to make sure your employees’ sensitive data is handled and stored in accordance with the 8 principles in the Data Protection Act. Ask where physical and electronic files will be stored, and how the provider ensures that personal and sensitive data is destroyed in accordance with the Data Protection guidelines.

  • Ask what HR system or database the provider is using.

    Your employees are used to running many aspects of their lives on social media and mobile devices. Find out if the provider can offer web based and mobile friendly HR systems for employees to book holiday or change their personal details.

  • Ask for references!

    Find out what other companies are using the provider, and ask for contact names in at least two. Client testimonials are only moderately useful – who publishes the negative ones? Ask the existing clients what’s great about the service, and what they would change about the service if they could.