For most companies, the decision to outsource HR — be it some or all of its functions — typically boils down to a matter of providing more HR know-how to employees. But what happens when Joe Employee rings up the HR line for advice on how to handle a benefits claim or a run-in with his boss, and the outsourced professional on the other end doesn't know anything about Joe Employee or have any background on the company's hierarchy and culture?
It's a nagging problem, and one that turns off many companies from pursuing an outsourced HR strategy. According to a study on HR outsourcing by the Society of Human Resource Management, 64 percent of responding organizations reported concerns that customer service to employees might be negatively affected in an outsourced HR relationship, while 51 percent were uneasy about losing control over responsibilities typically carried out within the organization. Moreover, 70 percent of respondents said they experienced certain challenges resulting from their outsourced HR relationship, and of those, 37 percent indicated that the lack of face-to-face time with employees was the downside of the outsourcing partnership.
So what's an HR-outsourcing wannabe to do? According to HR experts, if personalized service is what you're after, the general rule of thumb is to seek out an HR-outsourcing provider that is able and willing to offer a hands-on touch. "You don't want someone in Timbuktu, doing everything by computer or software — companies really need a partner that is going to deal with them the way they feel comfortable," noted John Glascock, president of Human Capital Management, a company specializing in employee compliance.
Much of that comfort level can only be achieved with regular face time — having the outsourced HR professional be on site at the outsourcing client, potentially as much as once a week, said Shelley DeSimone, director of HR at Montserrat College of Art in Beverly, Mass. and a former HR-outsourcing partner. "To be there and be accessible to employees is important," she said. "There needs to be a real understanding on the part of the HR partner on the core values and functions of the business; otherwise, the relationship is hollow for people."
For Kerry McCoy, a partner with API Software, a Santa Barbara, Calif. HR-consulting and -outsourcing firm, that means going as far as to have a dedicated desk at her local clients' offices and spending a fair number of hours at each office on a weekly basis. McCoy makes it a point to attend staff meetings, and she passes out business cards and contact sheets so employees know she's readily accessible. And in some cases, API has set up a hot line where client employees can call and voice concerns or get answers to problems with some anonymity, if required. "I've found that once you fix an employee's problem, word spreads and you become a fixture," she said.
McCoy and API stop short of getting involved or mediating office politics. "We just won't go there — we stay out of the fray," she said.
Not every outsourced-HR situation demands such a personalized, high-touch relationship, however. Outsourcing payroll or other transactional functions can be handled by an external company, while the face-to-face issues related to that specific HR role can be retained in house. That's the strategy that the Cincinnati Children's Hospital has taken, according to Ronald B. McKinley, Ph.D., SPHR, vice president of human resources for the hospital. The hospital is in the process of setting up an outsourcing relationship to handle the administrative aspects of its health and welfare benefits programs, primarily because, with 3,000 calls to HR a month and even more emails, the six-person internal HR team wants to provide better customer service to employees.
The Bottom Line
While the HR outsourcer handles the transactions and administrative paperwork related to the benefits programs, the process is invisible to employees, because if they pick up the phone to ask a question, they're routed to someone internally who's familiar with the hospital's environment. In other circumstances, the outsourcer will be trained on the hospital's culture and internal policies so that over time, they will be able to respond to employees in a personalized and familiar manner — just like any new internal HR hire would be after a learning period.
"Unless what you want is a cookie-cutter approach in terms of dealing with transactional activities, you've got to find a partner that's willing to tailor their approach to your organizational culture and criteria," McKinley said. "If they're not, you've just got to find someone else."
For more on HR outsourcing, check out some of Focus' many tools on the subject. Start with the Buyers Guide: HR Outsourcing to get all the information you need on the HR outsourcing industry. Next, read relevant community research and topical briefs to learn more about the market and leading solutions. If you still have questions, join a discussion in the HR Group or ask a question to get advice from industry experts.
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