Outsourcing HR functions

Outsourcing hr functions – How to do it

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The daily routine of an entrepeneur it’s hard enough. Having to deal with some of the admin tasks that imply having your HR related tasks in order could be drawning. However, you have to do them to be able to prevent most of your problems or to solve them efficiently when they come. This article will help you to decide the HR functions to outsource.

However, as we said, it is complicated to manage the business on the day to day basis and also to be in charge of all the admin tasks.

If you have more than 5 employees, it is very probable that you are not investing time on any specific task. It is very probable that you are more into the managerial side of business. If you are not, please reconsider this, money its not an excuse, you need to be managing the business, not being your own employee.

I am sure that when you first started your company, the vision was NOT “I want to be managing my employee’s absences, holidays and payroll”. Am I wrong?

That is why we want to give you the chance to review what it is done right now in your company that could be externalise and be done by someone who knows better about the topic than you do and it is not central to your business, I mean, it is not what you sell.

HR Functions to Outsource

On our post about the HR Functions, there are plenty of them that you could give away to another SME and have more time to do what you need to do. SELL, SELL, SELL, and then control that everything is going well and as planned.

I am not going to say that being an entrepeneur it’s easy, because its not. Being an entrepeneur means that you only worry about money and taking care of your project. This will take about 16 hours per day on your first years. Don’t get me wrong, it doesn’t finish, usually entrepeneurs decide to dedicate less hours so they can have a live, but they could still do 16 hours per day.

To reduce those 16 hours per day to 8, you need to give things away, its pure maths. What are the things where it really doesn’t matter if you are doing them or it’s someone in an office accross the street or someone abroad working from home?

What are those HR areas that you could externalise?

HR Administration / Personnel

All the related to Service Delivery and Information; payroll, contracts and absence management (sickness, holiday, etc..)

There are thousands of small tax agencies that will do your payroll for you. It is most probable that you have someone already doing your accounts and taxes externally. If they are not doing payroll, please do not hesitate to give it to them. It will not add that much to their budget.

If you don’t want to outsource it fully, at least, get a HR system that could help you to make it automatic.

Holiday and absence management:

Holiday and absence management is one of those aspects of your human resources department that NEED to be solved in a very efficient manner. There is no option for a NO.

We have seen many entrepeneurs saying things like “I trust my people, they would never cheat on their leave days”, and then… when the day comes, they have to face the awful truth, it’s their word against yours… and not only you are losing a trusted employee, but you have a precedent that others can follow.

Spreadsheets are really useful for budgets and planning, but not for Absence and holiday management. Comments get deleted, people say things like “In the end I didn’t go on leave that day” and you find yourself facing a research on something that should be simple.

However, that is not the worst thing that could happen. What could happen is that someone changes the amount of days they “booked” for holiday, or they don’t come in one day, where you scheduled a meeting with a client and they say “I told you I was going to be on holidays for a long weekend”

Does it ring the bell? We are sure it does. For that reason, even if is a free solution at the very beginning, start using a HR system from the very first moment that you hire your first employee. It sounds drastic, but it is about avoiding issues at a later stage.

Benefits of outsourcing to a HR system your annual leave and sick absence system?

You will not have to be checking anything. They send you a message and everything gets registered in the system. without any possibility of missunderstandings!


Once you have followed the steps to analyse what you need, the budget you have and the how the first 3 months of that new person will be and how it will affect the other members of the staff, you will probably have a job and an spec description for the role and the profile you are looking for.

How long is it going to take you to do a good recruitment process and how is it going to take part of your time? Do you have that time? Do you know how to do good interviews? Will you be able to find within time the right person for you within your budget?

If you have the time, know how to do interviews (properly) and you believe you will do it before you don’t need the role anymore… please do it yourself. If not, it may be good to contact a couple of agencies. Most of them work on success. That means that if you don’t find the right person, they will NOT invoice you.

All the others HR Functions, specially if you are rather small, we would recommend that you keep them in house or look for external porviders on ad hoc basis for specific projects, but make sure whatever it has to be with Organisational design, Training analysis, Employee relations, and Performance and reward plans are close to your line of management so this actions are aligned with your objectives.

If you are bigger, you could always externalise the role of a HR Manager or hire someone that could do everything for you. Evalutate the HR functions to Outsource and on the meantime, keep reading us for more advice on HR related topics.

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