How outsourcing HR can give access to world-class capabilities
The term ‘world class’ has become so commonly used that it has lost some of its impact and Holy Grail magic. In our highly connected workplaces and social lives, we can access knowledge, expertise and insight from people we will never meet, and choose our heroes and role models from a global panoply.
‘World class’ is no longer about having global experience, or confidently operating in an international context, because on some level, most people are doing that on a daily basis, even if it’s only through following celebrities on Twitter.
In a business services context, world class is now more about offering specialist expertise, personal credibility and quality delivery. Customers and clients will pay a premium for world-class services through which they can gain competitive advantage in their own business world. Premium branded businesses, whether in the product or services sectors, must protect their reputations and brand equity to justify their premium pricing. High-volume, low-price businesses must keep their cost base low to protect their margins. Charities are under increasing scrutiny to justify the percentage of their funding which is diverted to overheads rather than directly impacting their beneficiaries. Whatever the underlying business model, the efficient use of people is fundamental to every organisation’s success.
There are lots of models to describe the various aspects of the increasingly complex discipline of human resources, but the essence of HR is delivered on three levels: strategy, hands-on expertise and administration. Only if all three are being delivered to a world-class standard will the people in the organisation be used to greatest effect.
Admiral Nelson, indisputably a world-class figure, won the Battle of Trafalgar in 1805 with tactics that were declared as innovative and radical. He changed the nature of naval warfare by thinking differently about how to engage the enemy. He had sketched out his ideas about how he would dispose his fleet to various colleagues in advance, and was just waiting for the opportunity to apply them. He shared the vision with his ship’s captains, gave them high-level guidance on the ultimate goal, and most fundamentally, empowered them to make in-the-moment decisions to react to the conditions on the ‘battlefield.’
When the opportunity arose, he put the plan into action and roundly defeated his adversaries. World-class strategic planning; getting ahead of the competition, scanning the horizon for opportunities, and anticipating the impact on the workforce of decisions such as membership of the European Union, is critical for business success.
In business terms, whilst there may not be lives and countries at stake, great strategic planning and efficient disposition of resources are critical when considering mergers, acquisitions, disposals, TUPE transfers, relocations or other structural changes.
Managing the employee communication and engagement throughout the change, and empowering and upskilling the managers to get the best out of their teams are essential. These skills may not be required every day, but without them at the critical times, businesses can founder. Bringing in these skills at the right time from a service provider with knowledge and expertise may appear to be expensive in the short term, but will ultimately pay off, with a long term legacy.
Red Adair is a more recent global hero figure, who specialized in putting out oil well fires, with high profile successes as early as the 1960s in the US and Australia, as well as being on the team that put out the Piper Alpha oil platform fire, and at the age of 75, putting out oil well fires in Kuwait after the Gulf War in 1991.
Whilst there is no comparison with the life-threatening work of a professional firefighter, a phrase often used to describe HR activity is ‘firefighting’ – most often the unglamorous wastepaper bin fire, unnoticed by most, extinguished before it causes a larger problem, leaving just a whiff of smoke which quickly disperses. But if the fire is not caught early, is fed with fuel, or is dealt with using the wrong extinguisher, it can quickly become dangerous, and ultimately destroy the business.
The skills required to assess the situation, take appropriate action, use the right tools and initiate the emergency procedures when appropriate, are completely underrated. These skills are critical to business survival. Contrary to the idealised notions about the cartoon character Fireman Sam, a fire crew will not respond to a call to rescue a cat up a tree, being more likely to make a quip such as ‘Have you ever seen a dead cat up a tree? Try putting some food down.’
In the same way, some old fashioned ideas about the role of HR persist, and are best dispelled by establishing a clear service level agreement with the business, to ensure that time, energy and brainpower are best directed to where they are needed.
Outsourcing HR management and HR administration functions can impose a discipline it is sometimes difficult to instil in internal HR teams. An outsourced HR provider will generally adopt a more dispassionate approach, not least as a survival mechanism as they serve multiple clients. More to the point, each client only needs to call on them when their services are required, and are less likely to bother them with the small issues that can be solved with a bit of lateral thinking.
Moving even further down the glamour stakes it takes a fictional character to illustrate the world class qualities of a housekeeper – how many famous housekeepers spring to mind? Charles Dickens’ character in Great Expectations, Mrs Joe ‘was a very clean housekeeper, but had an exquisite art of making her cleanliness more uncomfortable and unacceptable than dirt itself.’
Sadly the systematic, accurate, diligent record-keeping, intelligent use of resources, planning ahead and ‘mopping up spills’ aspects of HR are truly under appreciated. Like Mrs Joe’s cleanliness, the common view of HR systems, processes and procedures is that they are a tiresome and unacceptable burden and people would prefer the chaos.
Except everyone does want to be paid on time, have their gym card ready, their medical claim submitted promptly and their childcare vouchers allocated to their account before the start of term. They want to know that their personal and financial information is safe and that their holiday will be approved by their boss.
This is where world-class administration and HR systems come in: simplifying routine tasks, and freeing up thinking time for more useful pursuits. The smallest businesses can access this world class standard of HR ‘housekeeping’ by outsourcing to organisations that are geared up to deal with the volume, have seen it all before, and will offer their expertise and technology at a fraction of the cost of installing the systems and processes internally. In some cases they can also offer cost savings by acting as brokers of services where the number of ‘lives’ in a small business does not make it worthwhile for healthcare, insurance and other services providers to engage directly with them.
There are rare circumstances that would need Admiral Nelson, Red Adair and ‘Mrs Joe’ all in a room together. Outsourcing some or all of the three critical functions of HR to the relevant experts allows businesses of any size to access world-class capabilities when they need them.
About the Authors
Marc Bishop and Sharon Crooks are the co-authors of HR for Small Business for Dummies.