August 28, 2015

What are the benefits of an internal HR team over an outsourced one?

The primary benefit of having an internal HR team rather than outsourcing the HR function has to be connectivity with the business. What does that mean? It means having a fleet of in-house HR personnel who really know the business, what its drivers are, its objectives, its needs and the needs of the people within the business. It’s about having a holistic view of all the people issues – recruitment, L&D, performance management, career development, etc.

The importance of this cannot be underestimated. What organisations need is HR teams that know the business and industry inside out and have aligned their focus with business needs. That is when HR can really help the business succeed by recruiting the right people, developing talent, retaining top talent, succession planning, ensuring the workforce has the right skills and so on.

The HR business partner model is what many organisations aspire to and internal candidates should be well placed to fulfill this role.

This does not mean that outsourced HR teams cannot and don’t offer strategic, business-focused support. However, they are unlikely to know the heartbeat of an organisation in quite the same way.

Also, when it’s an in-house HR team, the business really knows them. If it’s a good HR team that adds value to the business, then the business appreciates what benefit HR brings the organisation and the role that the different disciplines have to play. The importance of this can also not be underestimated.

HR is so easily dismissed as being fluffy, not aligned to business needs and lacking in strategic input. In order for an HR team to shake off these perceptions and have a strategic voice, it is critical that it has good relationships with people around the business, particularly the top table and managers. If HR can foster those relationships with the workforce, it increases its standing and credibility and makes it easier to get buy-in for any initiatives.

Internal HR teams should have a really good handle on what matters to the workforce, offering invaluable insight into how to motivate them and make the organisation a great place to work.

Plus, when HR is a well respected function that operates at the heart of the business, it is more likely that the workforce at large will trust it and approach HR with any issues, such as internal conflict.

However, many organisations choose to outsource at least some of its HR duties, particularly those of a transactional nature, and by and large, this works well. The majority of small organisations simply cannot afford to have any or all of the necessary HR expertise in-house.

Although there is a general business trend to outsource, it is not reflected in HR. A CIPD report, ‘HR outsourcing and the HR function. Threat or opportunity?’ found that 71% of those surveyed choose not to outsource HR. Why not? The existence of an effective, well-resourced HR team already within the organisation was cited by 52%. Thirty-five per cent said they were unconvinced of the benefits of outsourced HR, and 24% reported an already effective use of a shared services model.