If HR is not incorporated in the company’s future business strategy, you may easily end up in a situation where your expectations of the results of outsourcing are not met.
More time for core business is often the motivation behind outsourcing, and that also applies to outsourcing of the company’s HR functions. In a time of rapid technological development, the need for competent employees may develop overnight, and how do you ensure that the required HR competences and resources are available when that happens? Outsourcing!
According to Johnny Husen, Head of Strategy & Business Development at People & Performance, practically every HR function can be outsourced. We know that the more traditional areas like payroll and recruitment can be outsourced. Today the HR functions of modern business strategies are much more complex, but they can still be outsourced. You should, however, be careful when you outsource business critical processes, and you should abstain from outsourcing actual management processes.
“I often see companies who want to outsource logistics, but who haven’t considered the implications for their business strategy. For example a retailer who delivers to large supermarkets. But in this way they have only outsourced from the loading dock to the consumer. This means that the consumer is met by a driver who is probably very good at driving the lorry, but who does nothing but unload the goods at the customer’s. This is then how the customer meets the company. This means that the strategy has not been thoroughly considered. You may save costs today, but that doesn’t matter if your customer is not satisfied,” he says and states that when it comes to outsourcing of HR functions, the decision is often motivated by a wish to be able to adjust the size of the HR department to meet the specific need at any given time.
Trust between the parties is vitalAn outsourcing agreement between two parties requires confidence and integrity to achieve a mutual trust allowing sharing of relevant information on strategy and plans, and aligning of expectations to enable the outsourcing partner to deliver the services that match the company’s needs.
“A professional outsourcing provider offers an outside perspective on the company’s business plan and may assist in assessing the value of the company’s HR functions. It is essential that both parties acknowledge how outsourcing can be of value to the company - also by looking into existing work processes and structures and how they may need adjusting,” says Johnny Husen and adds that the experience and competences offered by the outsourcing partner in relation to handling of the HR functions are also vital to success.
A clear view of the future strategy is a mustOutsourcing HR functions requires a clear strategy and an overview of core competences. Outsourcing must be incorporated in the strategy, and according to Johnny Husen that is not something you just do overnight. It takes thorough preparation and a good dialogue with the outsourcing partner.
“We enter into an active dialogue with the company, and together we take a look at the organisational structure. We consider future budget years when establishing a future business plan or strategy. The company generally tends to look at and analyse existing in-house structures instead of looking ahead and considering how they should look in the future. It may seem difficult to implement changes in the company, but if you look ahead and define how you want it to be in future, then it becomes easier to make the necessary organisational changes,” he explains.