A Society for Human Resource Management (SHRM) survey on the HR outsourcing efforts of 891 organizations came up with these findings:
- Nearly half of respondents (49%) felt that HR saved money for their business, while 28% felt it cost them money, and only 3% said costs remained about the same.
- The vast majority (85%) were “satisfied” or “very satisfied” with their HR services.
- Only 10% reported dissatisfaction with their vendor relationships.
In a separate SHRM survey, the most commonly outsourced aspect of HR was employee assistance and counseling (62%), followed by flexible spending account administration (60%), background and criminal background checks (52%), COBRA (45%), pension benefits administration (33%), retirement benefits administration (31%), retirement planning (28%), health care benefits administration (27%), temporary staffing (25%), wellness programs (22%), and risk management and Workers Compensation (21%). Many companies outsourced these functions partially and very few of them did it completely in-house.
When you think about it, those HR functions peripheral to a company’s core competencies should be outsourced. Dr. Deming preached that administrative duties should either be delegated or outsourced. Of course, the two most significant areas involve people’s health or money — not a core competency of any company. When it comes to functions such as training, performance management, payroll administration, compensation, and so on, most companies keep these activities in house.
More than four in five (82%) of the companies that use the HR That Works program stated that they would use it more if they had more time. One way to get this time is to outsource low-common-denominator administrative duties such as those just mentioned. If you’re involved in HR and running payroll reports takes up a third of your time while you have no time for strategic activities, it would make sense to outsource the payroll function.