Steps Of HR Outsourcing

thesmarttrainer | Sep 17, 2010 |

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Author Mary F. Cook defines HR Outsourcing as "having a third party service provider furnish, on an ongoing basis, the administration of an HR activity that would normally be performed in house."

We've been living in the world of outsourcing for quite a while now. But HR Outsourcing is comparatively new to the business circuits. Here is how a typical HR Outsourcing process is carried out.

8 steps of HR Outsourcing:

Setting Of Objectives - Many companies do not objectively analyze the needs before going into outsourcing HR process and later regret the decision. Each company is different and has different solutions for its problems. Understanding the underlying structure of an organization and how outsourcing will fit in it, forms the crucial first step of HR Outsourcing.

Implications on major stakeholders - HR outsourcing is not just a management's prerogative because it affects the entire company. Outsourcing of HR processes is much more complicated than outsourcing function related to, say things. Hence the implications on people's jobs and work roles are analyzed before finalizing the decisions. Many HR service providers absorb trained employees from the client's company too.

Analyze the benefits (both tangible and intangible) - There are more benefits of outsourcing apart from its cost effectiveness. Is your company in need of more efficient processes or is it lacking in innovation or is there manpower shortage. What benefits does the company expect to reap from the outsourcing? It helps to spell out the benefits right at the beginning.

Selecting vendors - Vendor selection is another crucial stage of outsourcing exercise. Do not go by recommendations and sales presentations only. An honest reference check is carried out to understand the service levels of the provider. It is all the more important, because here the failure of outsourcing directly affects the employee satisfaction.

Contracting - Once a vendor is selected, the agreement is drafted which formally lays out all the terms and conditions of the trade. This contract is signed by representatives of both, the service provider and the client.

Transfer of Resources - Based on the terms of contract, resources are transferred between the parties. It could mean transfer of resources, documents and manpower. Regardless, the client company needs to guide the service provider for some time.

Reviews and Relationship management - People processes begin with relationships. It is important for the client company to keep a check on the functioning of the vendor. Periodic reviews and audits are conducted to ensure smooth functioning of the outsourced processes.

It is recommended that companies should refrain from outsourcing its entire HR function in one go. Phased outsourcing of various HR functions like training, recruitment, payroll management etc. makes the process smoother and more efficient.