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How can a company benefit by outsourcing its human resource activities? - March 2008

By Rick Hughes

How can a company benefit by outsourcing its human resource activities?

Quite simply?all organizations should focus on their core business and outsource the non-core functions if they can be done better, faster, and/or cheaper by an external service provider. And, unless human resources is the core business, companies of any size can benefit by outsourcing this critical function.

The typical ratio of HR-to-Staff is 1:150. This means that most ?world-class? organizations have one HR employee for every 150 staff members. Therefore, most companies with less than this number are typically managing the HR function on a part-time basis with one or more non-dedicated resources. Outsourcing the HR function has a two-fold benefit. First, the internal staff is able to dedicate more time to their core functions. Second, the external provider increases the expertise of the HR function since they specialize in the various aspects of human resources. Once the employee population grows beyond 150, then it?s time to have one or more dedicated internal resources. However, these professionals should be focused on the strategic end of human resources?not the administrative end. This includes finding and hiring the next great top talent?providing training and development opportunities to the current workforce?helping managers become better leaders?managing the performance improvement process?etc.

In other words, the strategic side of human resources should be focused on continually ?raising the bar? on the internal talent of the organization. The administrative end should be done outside of the organization where it is the core competency of someone else.

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