Why Small & Mid-sized Companies Need a Great HR Team … And How to Get It!

Last month we highlighted some key reasons why giving our employees access to a
strong HR team enables our business to not only function but also to thrive.

As small and mid-sized business leaders we fully recognize the importance of managing well the human aspect of our companies. And we have all felt what it takes to effectively manage the various HR functions, whether it be maintaining compliance with ever-changing regulations, handling employee relations, or implementing strategic talent initiatives. It can quickly become a complex, time-consuming task.

Yet business realities limit our options to either handling HR on our own or investing in a very small team, neither of which deliver the best value to the business. These are the times when we will be best-served by considering a third option – engaging with an outsourced HR provider. Finding the right partner to support us in effectively managing our human capital may be just the cost-effective, scalable solution we need to help us as business leaders focus on what we do best—grow our company.

Top 5 Reasons to Engage With an Outsourced HR Partner

• Cost savings – Having an in-house team of HR professionals with expertise across the various practice domains can get very expensive very quickly! Salaries for experienced HR professionals, along with the necessary technology and resources, can put a strain on our company’s financial resources. By outsourcing to the right HR team, we can gain access to expertise and services at a fraction of the cost. (Even when we, as business leaders, single-handedly manage HR, it comes at a cost in the form of lost business opportunities that we can’t pursue because we are bogged down with the people element of our business.)
• Access to HR expertise – Even with large in-house HR teams, there will always be gaps in the expertise needed to navigate the complex and demanding environments we are navigating as business and people leaders. Outsourced HR firms can provide the deep knowledge across diverse areas like compliance, compensation & benefits, employee relations, recruitment, retention, performance management, talent development, etc.
• Compliance and risk management – The landscape of labor law and employment regulations changes frequently and, oftentimes, in subtle ways. One misstep and our business’s existence may be put in danger. A strong outsourced HR provider will ensure that our company remains compliant with labor laws, from wage and hour rules to workplace safety regulations and effectively handles any employee relations issues that arise.
• Focus on core business activities – Managing day-to-day HR operations, from processing payroll to handling employee disputes, can pull us away from our core business functions such as strategic planning and execution, product development, marketing or sales. With transactional HR tasks in the hands of experts, we can be confident that employees are being taken care of while we focus on growing our business.
• Improved employee experience – An outsourced HR provider can identify gaps and opportunities in our human capital practices and help us implement programs that improve employee engagement and retention, such as training, development, and performance management systems. Our outsourced HR team can also offer objective perspectives on employee relations, leading to the efficient and effective resolution of conflicts and boosting workplace morale.

How to Find the Right Outsourced HR Partner

Beyond cost savings and operational efficiency, the right outsourced HR team should be willing (and able) to play a crucial role as a strategic partner in our company’s growth and success. Here are some things we should look for in identifying the right outsourced HR partner for our business:

• A commitment to aligning HR with our business goals – A strategic HR partner will go beyond transactional tasks like payroll and compliance. They will work with our business leaders to identify and implement HR initiatives that support our business objectives and fit the nuances of our specific industry and environment. Whether it’s developing talent to meet future needs, designing performance management systems that drive productivity, or creating a culture that attracts the right talent, an outsourced HR team will help us put in place a long-term HR strategy that supports your company’s growth.
• A customizable and scalable approach with tailored services – Every business has unique needs and goals. Some of us may only need help with payroll and compliance, while others might require services across the gamut of HR practice areas. A provider that offers us flexible, customizable solutions, allowing us to select only the services we need, will provide us not only with the cost structure we can afford but also with the scalable capabilities we will need in the future as we grow our business.
• A focus on data-driven decision making – Often we mistake HR for a function that is more about the “human touch” than about the hard data. A strong HR partner will have the right tools and technology to deliver data analytics and reporting that give us insight into key people metrics such as turnover rates, employee engagement, performance trends, etc. And, as a strategic partner, the outsourced HR team will use this data to make recommendations and help inform our decisions on workforce planning and investments that directly impact our company’s bottom line.
• A strong talent acquisition and retention practice – For a small and mid-sized company, there is very little room for hiring mistakes. One bad hire in a team of 10, for example, will have a much grander impact than a bad hire in a company of 1000. Finding and retaining the right talent is essential for our businesses to remain competitive. An outsourced HR provider should have scientifically-sound and data-driven practices in place that will help us attract, recruit, select, onboard, manage and retain the right talent to achieve our short- and long-term business objectives.
• Experience in change management – As our companies grow, it is almost guaranteed that we will go through periods of significant change, whether it’s scaling operations, merging with another company, or launching new initiatives. An experienced HR partner must be able to help us manage these transitions smoothly, ensuring that communications are clear and timed right, morale stays high, and employees remain engaged. The right HR team can also assist us with restructuring, leadership development, and training that will ready our workforce for new challenges.
• A focus on company culture – Our company’s culture is critical in shaping our employer brand. The right outsourced HR team will guide us on how to build and maintain a positive workplace culture, ensuring alignment with our company’s values and goals. Whether through team-building initiatives, diversity and inclusion programs, or leadership development, they can help us create an environment where our employees thrive. Because our HR partner will impact, directly or indirectly, our culture, we need to ensure that their values align with ours – aligning on overall cultural fit on how both sides “view the world,” will set the partnership up for success from the get-go.
• A proven track record of success – An outsourced HR provider’s reputation in the marketplace is just as important as their capabilities and flexibility. Be it through client testimonials, case studies, and/or industry recognition, we want to ensure we establish a partnership with an HR team that has demonstrated their ability to deliver results for companies like ours.

Key Takeaways

In leading small and mid-sized companies, outsourcing HR can (and should) be a strategic decision. Engaging with the right HR partner will help us streamline operations, improve compliance, and enhance the employee experience—all while saving time and money and freeing our capacity to focus on growing the business.

Choosing the right outsourced HR partner is not just about offloading administrative / transactional tasks—it’s about finding a partner that is also in a position to support and fuel our long-term business growth. Working with an HR provider that offers data-driven insights, talent strategies, and change management expertise, in alignment with your strategic goals, makes them a valuable extension of our leadership team and not just a service provider.

If you want to have a conversation around how we can partner together in building and delivering HR practices to fuel your business growth, reach out to talk with one of our HR experts.