What Does Outsourcing HR do to Align HR with Business Strategy?

November 1, 2016 Zuman

When considering outsourcing, HR leaders and company executives tend to focus on the many benefits of this specific approach to business. For one, it helps HR as a whole develop into more strategic partners, working more closely to achieve companywide goals. Outsourcing also helps with issues like risk management and facilitating employee development, according to the Houston Chronicle. As more companies turn to outsourcing - 80 percent already have to some extent - more benefits will emerge.

Despite these upsides, HR Morning raises an interesting point: What does all this outsourcing do for an individual company's sense of self-sufficiency? As more companies seek out partners, how does this ability to manage vital HR functions impact a company's business strategy?

A Matter of Compliance
It's important to understand what most employers want to outsource. For that, we turn to a report from FO Research and Prudential Financial. For the most part, firms are looking to outsource those tasks related to compliance with a suite of federal laws.

That includes maintaining ACA requirements (46 percent), Family and Medical Leave Act compliance (39 percent) and agreements tied to the Americans with Disabilities Act (40 percent). Shifting the work of these responsibilities makes sense: The time saved on these mostly bureaucratic components leave plenty of time for other tasks that business leaders deem more essential. That includes benefits administration.

Expanding Outsourcing Efforts
AS HR Morning explained, many HR leaders are hesitant to outsource benefits because it's a way to offer employees a more personalized experience. These benefits are a huge factor, and customization helps employers ensure workers are thoroughly engaged with the business. Despite the reluctance to shift benefits administration, Jake Biscoglio, a VP at Prudential Group Insurance, told HR Morning outsourcing can make a world of difference. Specifically, it's much easier for planning purposes since members now access new benefits tools than never had before. In this way, it makes sense to outsource further, but that doesn't mean companies have to give up power.

Striking a Balance
Joshua N. Jeffries is a partner with the Maryland-based Arkin Youngentob Associates, LLC. During the May 2016 Dig|Benefits Conference in Austin, Texas, Jeffries outlined four essential components for effectively outsourcing benefits administration

Some of these are more basic, like charting a company's specific needs, like how much money to spend on outsourcing services and the details of compensation plans. It's also important to understand the outsourcing vendor in detail, including how they operate, associated fees, accompanying pros and cons of the relationship, and other details that give you a clear picture into this new partner. As an extension of the evaluation, companies must understand how the administration functions will be implemented. his will ensure every department is prepared and knows what to expect in the transition.

Jeffries' last step, a shift in company culture, may explain some of the aforementioned reluctance. This process can be taxing for employees, who may feel as if their benefits are changed somehow. At this point, discussion and education are essential, helping to ease people into a new way of administration that will only improve their experience at work.

Jeffries' method isn't just about protecting the company's financials or make employees feel more secure. It's about finding that essential balance need for outscoring. One that gives companies all the benefits of outsourcing - help and guidance - without compromising that sense of identity or ability of self-control. 


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