Outsourcing HR

njjel · March 2004

It looks like my company may be looking to outsource HR (which means I won't have a job I would say). I'm looking for some thoughts as to what excellent defenses could I present to upper management to keep me and not outsource HR? Do any of you have part of your HR outsourced? Your thoughts are appreciated! (They are looking at ADP as the HR outsource.)

deniseE · March 2004

Sometimes having an HR dept. that knows the culture of the business is what keeps things running smoothly. With outsourcing, you lose that personal touch.

Do they think that this will save them money?? Maybe prepare some sort of report that shows that it will not be cost-effective.

rad · March 2004

Do some research and find some articles that back up your position. There is so much out there on outsourcing and HR is one field that is typically hit. My company did the same thing for some HR areas and I think its a mistake, the vendors do not have vested interest in my company or my stock price, and I find that the integrity of the data has become compromised in many situations. In the effort to save money, many companies use this as a band-aid solution but its not a long term solution.

mcmel · March 2004

This company had portions of their HR outsourced twice and now that HR is completely inside, we still have problems caused by the outsourcing.

Now, when filing a Worker's Comp claim, when I have to report income for the ee for the last 12 months, some of the information is inside our company, some is outside. Therefore, it takes longer to gather the info from the "other company".

Direct deposit, garnishments, child support, everything is double-duty because somebody at the company has to re-route paperwork and communication, which does nothing for the confidentiality that they thought they would gain by outsourcing HR.

Also, I agree with the other poster . . . some "personal touch" is lost by outsourcing HR. You can't put a price on that.

HRQ · March 2004

It sounds like your company sees HR as an administrative position.

Outsourcing to ADP would get rid of some administrative responsibilities, but it's important for a human being with HR knowledge to be available for all the "human stuff". Will the employees talk to ADP about grievances? Career advancement? Advice? Will ADP coach the supervisors through employee discipline? Who will hold your supervisors in check when it comes to managing their employees?

We use ADP for payroll and a few other administrative tasks but somebody still needs to get the data to them. A human being (me) conducts new hire orientation, trains supervisors in all things HR, deals with grievances, helps employees understand benefits, investigates/reports WC claims, blah blah blah.

I suggest splitting your job description into two categories: administrative and non. Some administrative tasks might be outsourced or at least more automated, but the "non" stuff should be handled by a knowledgable human being inside the company.

LarryC · March 2004

My company hired me 2 years ago to come in and create an HR department where none existed before. Up until then, all HR was outsourced for a period of about 5 years. The owners of our company are extremely pleased with what they have now for the following reasons:
1. Even though I am a manager and have a salary higher than the owners', I'm still cheaper on the bottom line and that includes the outsourcing of payroll to ADP. (ADP ain't cheap)
2. A PEO will give you "off the shelf" policies, insurance, work comp, etc. where I am able to customize and maximize the value of these things for my company. If the PEO says they will "customize to suit you", that means they have several "on the shelf" and they will pick the one that resembles what you need.
3. Employees now get answers to their questions and concerns same day, where with a PEO it was weeks and frequently never. (IF your company makes this move, your morale may decrease over time)
Hope this helps. If anybody in your company wants to call me or our owners, let me know by e-mail and we can get something going. I'd be glad to help. They will get a unanimous "You're doing the wrong thing!" from us.

AnneHa · March 2004

Nigel,

I remember this subject from a few months ago and looked it up again. There were a lot of excellent responses (as usual) and they may be helpful to you now in your situation.

Good luck - I would hate to think what outsourcing my responsibilities would do to morale around here. x:-(

[url]http://www.hrhero.com/employersforum/DCForumID14/3855.html[/url]

Anne in Ohio

njjel · March 2004

Thanks that was an interesting thread.

Rockie · March 2004

I can't imagine a company of any size totally outsourcing Human Resources. There is no "canned" program that can take the place of having an on-site advisory person on staff to keep the company legal and assist the employees with issues. When I think of oursourcing, I think of Workers Compensation or COBRA outsourcing, not pure Human Resource employment issues.

ADP is trying to set themselves up in the HR outsourcing marketing, but if they can't do that any better and more cost effective than they do payroll, then they certainly won't be successful. We just transferred our payroll in-house after being with ADP for years.

AJ SPHR · March 2004

[font size="1" color="#FF0000"]LAST EDITED ON 03-19-04 AT 08:06AM (CST)[/font][br][br]As I read the replies to your question, I wonder if we have a tendency to get a bit defensive about this topic? Outsourcing is a trend that's here and has been here for several years. I think there are parts of HR that absolutely make sense to outsource - like claims processing (for self insured plans) to a TPA, like COBRA administration, like all the 401(k) and pension plan administration. These are just things I can think of off the top of my head. I don't think that "outsourcing HR" needs to spell the end of HR, but may offer a change in how we and some companies view HR.

Getting rid of the NVA (non value-added work) allows you as an HR professional the time to focus on VA type work. Learn the business, become more of a partner, focus on organizational development, become a compensation plan expert (since compensation seems to be one area that doesn't seem to be "pushed" to be outsourced), show that you're a valued and respected employee relations advisor. I know that I can actually create a spreadsheet of money saved due to my involvement in a couple of touchy termination situations.

So, my bottom line advice is be careful how you approach your management. Don't come across as resistant to new ideas, but offer detailed plans with compromised alternatives and include the value you would continue to provide in your new, stronger HR professional and "business partner" role.

Good luck!

njjel · March 2004

AJ = I agree with you. The reason I wanted input on this is that we already do outsource the topics you refer to above so if the company is looking at further outsourcing.......I think the picture is pretty clear. Hopefully I'm wrong because I believe a live person assists the employees as well as the company much more than a company with no vested personal interest other than dollar signs. Not to mention we HR pro's look at every detail. I recently saved the company almost $3,000 by picking up a billing error in our medical insurance and going to bat with the insurance company for them to return it to us. I doubt an outside source would have even done that.

AJ SPHR · March 2004

You should use that info you stated as part of your justification for keeping a human HR presence on-site. That's all good stuff that shows your value that an outsourcing vendor can't provide. Prepare your proposal with that aspect in mind - that it's always great to look at new ways to do things and here are one or two more programs or duties that could be outsourced, but then here are the other services I provide that should remain. And, here's why. Good luck!!!

KAMINSKI · March 2004

I totally agree with the postings. We outsourced prior to my becoming HR Director. It took me 2 years to build back trust.
It often cost less to keep HR in house and in our case that is definately the case.
I think it depends on the size of the company and the duties and responsibilities HR performs which also varies from company to company.

We have less than 50 employees so that has an impact on our decision not wanting to outsource again. With such a small workforce HR actually can get to know each employee well and provide personal service so-to-speak.

We do oursource our 125 Flexible spending plan and payroll.

I did the POP 125 in house but when you go to a flex plan it becomes a lot more cumbersome. A decision was made to oursource because my attention was needed to somewhere else, like in creating handbooks, affirmative action plans etc.
My background is more legal so that made sense for us.

I think outsourcing for the real personal stuff like worker's comp, unemployment, etc. is a mistake for smaller companies. You lose control over personnel planning in a sense.

We have almost no turn over in staff. I have established a lot of recognition programs. Staff is more like a family and it shows in work performance.

My 3 cents worth.

Carey · March 2004

I didn't read all the posts, so don't know if this was covered, but is ADP going to indemnify your company for any and all wage/hour, discrimination, harassment, etc. claims if the situations weren't handled properly? I doubt it. Without some internal control you lose all control and remain on the hook when something goes wrong.

We're in the process of outsourcing some of our more administrative HR functions, like benefits admin and tax stuff, but employment, employee relations, and compensation are staying (at least for now).

Paul in Cannon Beach · March 2004

Unless your organization is very small or has a very narrow definition of "HR", I don't see how its possible to outsource 100 percent of your HR functions.

I am fortunate to have almost no administrative duties and so my time is spent developing our staff, discipline and coaching, staying up on legal issues, and posting on the HR Hero forum. x:D

My 8 year old thinks my job is basically "talking to people". She is mostly right.

Good luck and please keep us posted.

Outsourcing HR

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