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How Business Leaders Can Build a High-Functioning HR Department

Historically, Human Resources departments was seen as an administrative team within an organization that focused on regulatory compliance and payroll. However, in today’s ever-evolving and increasingly people-focused business world, HR has become an integral part of any successful company’s leadership team.  

The most successful companies have learned to strategically focus their HR assets in order to make the largest impact within their organization. In this post, we’ll explain just how to do this.  

Specifically, we’ll discuss: 

  • Big Picture HR Strategies vs. Tactical HR Elements 
  • Keeping Your Internal HR Assets Focused on Big Picture Strategies 
  • Outsourcing Your Tactical HR Elements 
  • Choosing an Outsourced HR Partner 

Big Picture HR Strategies vs. Tactical HR Elements 

We’ll frame our recommendations in this post under two main categories: 1) Big Picture HR Strategies and 2) Tactical HR Elements.  

Big picture HR strategies are the items that you hope to improve over time. Examples include company culture, talent acquisition, employee development, employee diversity, employee satisfaction, and employee retention. 

Tactical HR elements are the day-to-day or week-to-week processes that must be carried out for standard HR operations. Examples include processing payroll, administering benefits, and storing employee data.  

Keeping Your Internal HR Assets Focused on Big Picture HR Strategies 

Successful companies generally keep their internal HR assets focused on big picture HR strategies. This means that HR leadership and supporting staff focus their day-to-day efforts on improving company culture, recruiting top talent, developing strategies to improve employee diversity, and other high-return areas. 

These are the tasks that will lead to greater success for your company in the long run. Ultimately, HR is all about people. Where would your company be without the people who keep it running? While the tactical HR elements like payroll and benefits administration are critically important too, the work involved with their administration is much more technical and involves little to do with strategic human capital management.  

For this reason, your internal HR assets should focus on those bigger picture HR strategies that will significantly impact the people who work for your business moving forward. 

When you are looking to hire new HR team members, be sure you keep these considerations in mind. You might have a candidate who is an expert in administering payroll and benefits, but make sure the candidate can also think strategically about big picture HR efforts before you hire them. The ability to contribute to the big picture HR efforts will be much more valuable for your business in the long run.  

Outsourcing Your Tactical HR Elements 

Tactical HR elements such as payroll processing, benefits administration, and storing employee data are not overtly challenging – but implementing and managing systems to carry out those tasks does take time and resources.  

Outsourced HR partners already have these systems in place, and they have mastered the use of these systems as they have implemented them with hundreds of businesses just like yours. If you choose a partner that is a great fit for your business, they should be able to get the systems up and running for you with a short onboarding timeline. 

Although there are costs associated with hiring outsourced HR partners, it also saves you time and money by eliminating the need for you or your staff to implement and manage tactical HR systems.  

The other significant benefit of working with an outsourced HR partner is that it can greatly reduce HR risk. By having an expert third party manage key HR processes on your behalf, you can greatly reduce the odds of making costly mistakes associated with violating HR laws or payroll processes. As a business owner, the last thing you want to deal with is a fine imposed by a local government agency or disgruntled employees with late paychecks. 

Choosing an Outsourced HR Partner 

Here are some questions you should ask yourself when you are researching different HR outsourcing solutions: 

  • What will be the costs of working with this partner, both in the short term and the long term?  
  • Does this partner have the technological capacity to grow as my business grows? In other words, can this partner adapt to fit my needs as my company expands to include more staff and potentially additional geographic locations? 
  • Does the partner provide adequate training to my staff so that we can use their platforms or systems to the fullest extent possible? 
  • Does this partner meet all legal compliance requirements, especially related to privacy and security of sensitive employee data? 
  • Will this partner have the financial stability to ensure they stay in business over the long term? 
  • Can I depend on this partner to properly address challenges and issues in a time-sensitive manner? 

Key Takeaways 

In the realm of HR administration, there are both big picture HR strategies as well as tactical HR elements.  

Big picture HR strategies include things like improving company culture, acquiring new talent, employee retention, improving diversity efforts, and developing employees. 

Tactical HR elements include things like processing payroll, benefits administration, and storing employee data.  

Savvy business owners will understand the advantages to keeping internal HR assets focused on big picture HR strategies while outsourcing tactical HR elements. Some of these advantages include: 

  • Increased efficiency of employee time and resources. 
  • Reduced risk of litigation and fines for employers. 
  • Increased focus on the big picture aspects of your business that will lead to greater success over time.  

Finally, if you do decide to work with an outsourced HR partner, be sure to do your due diligence so that you pick the best fit for your business’s unique needs. 

Should you outsource essential business functions? Key Considerations

This is a guest post written by Launchways strategic partner, Larry Levy of CFO Options.

Have you thought about outsourcing some function of your business but now sure if you should? Maybe you’re uncomfortable outsourcing something that you think should be handled by an employee.

Whatever your current thoughts are, keep in mind that no company or organization is fully independent of other vendors, suppliers or service providers. To give but just one example, if you need to get something to a customer, do you have one of your employees drive it to the customer or do you put in the mail, FedEx, UPS or a messenger service? More often than not, you use a service. The point is all companies outsource some things, and they do this for a variety of reasons including:

  • The outsourced company is set up to do this more efficiently and better than you can
  • You don’t have the time to do it yourself
  • Your time is much more valuable doing other things that bring your company and your customers the highest value
  • You can’t afford and/or it doesn’t make financial sense to keep resources around to do things that don’t need to be done all the time (i.e. on a full-time basis.)

While it is customary to outsource functions like delivery, processing of payroll and preparation of income tax returns, other functions that can be outsourced are less common and you may feel less comfortable outsourcing them. Examples include marketing strategy and execution, bookkeeping, human resources and IT.

When considering outsourcing a function, the first thing you should think about is whether the area under consideration is a core strength of the business. Is it something that sets you apart from your competitors and allows you to provide exceptional service and results to your customers? To the extent the answer is yes, these are functions you should probably keep in house.

The second question I would ask is am I devoting resources to this function that can be used better in other areas? As an example, do you have a CIO fixing employee’s computers? Or, do you have a CHRO processing payroll? These are examples where the people taking care of these tasks are over qualified for the task. If doing these tasks is preventing them from getting other higher value things done, outsourcing the lower level task could make sense. Contrarily, if the time they spend on these things is small and doesn’t get in the way, outsourcing is probably unnecessary and costly.

Third, do you need expertise in some area, say marketing strategy, but you don’t need it full time? If so, I would strongly consider outsourcing. The alternative, bringing in highly compensated talent on a full-time basis when the function only requires a fraction of a full-time role, is both costly and can set up a pattern where people in your organization are not fully utilized. And potentially worse, they start taking on lower level tasks to keep themselves busy. When this happens, the company may be spending more than it needs to for their various functions and thinking that it needs.

In summation, outsourcing gives companies the opportunity to have another party (person or company) get certain work done when they don’t have anybody on staff with expertise or the time to get it done and/or it doesn’t make sense to bring that expertise in house because the needs are not close to full-time.

About the Author

If you’d like to discuss this further including how CFO Options helps its clients with a variety of strategic financial management as well as tactical bookkeeping and accounting solutions, please reach out to Larry Levy at llevy@CFOoptionsinc.com.