"HR as a shared service" typically refers to large, multi-location corporations that require centralizing their less strategic HR tasks. These organizations often leverage a call-center HR platform that provides general HR services, such as payroll and HRIS, as well as some specialized services like recruitment and policy inquiries, thus allowing them to focus their efforts on more strategic HR functions. This approach has been proven to reduce costs and streamline support services more efficiently.
In contrast, small businesses without the budget to afford full-scope HR support face a different challenge. In recent years, smaller firms have begun collaborating and sharing support functions, including HR, IT, and finance. This trend emphasizes a common goal among businesses, which I refer to as "HR as a shared vision". By pooling their resources, small businesses can access common business services, enjoy cost savings, and streamline support without incurring excessive expenses.
A shared HR vision for small businesses is to achieve the companies’ goals through effective and efficient ways of managing people resources.
One HR professional I admire was a pioneer in creating a shared vision. She pooled together a group of five non-profit organizations and offered them HR support in recruitment and employee relations issues. All of her clients shared similar needs, challenges, and concerns. Although one might think that these organizations would compete for talent, this HR professional encouraged them to collaborate. For candidates who were not successful in one organization's job, she would ask the top candidates if they would be interested in another similar organization within the pool. The results were astounding!
Three of our clients operate in different industries, but the small business network helped the owners meet and become each other's sounding boards. I started working with one of them on several people challenges. The owner then asked if I'd be open to meeting with two other business owners with similar issues. One meeting turned into two, into four, and into a continuous pattern. To enhance their people management skills, three discerning business owners have availed themselves of my customized learning sessions and consultations. These individuals split the cost of attending these sessions, designed to enable them to solve their personnel-related challenges with greater proficiency.
The cost factor and lack of awareness have presented significant challenges to small businesses seeking HR services. Often, these enterprises only seek HR consultation after hitting a wall, such as encountering a human rights complaint, a need to terminate, an extended leave of absence, or turnover issues. However, HR support is a critical tool for expanding business operations. Outsourcing HR support provides a viable solution for small businesses that lack the need or budget for a full-time in-house HR department.
Businesses often seek out HR service providers through various channels, such as networking, referrals, or business advisory services offered by various agencies. Alternatively, some organizations choose to purchase enterprise software that comes bundled with some HR consultation provided by the vendor. When considering potential HR service providers, businesses should carefully evaluate several factors.
1) Define the need for HR service and commit to it
Often, small businesses are busy with operational duties, and although they recognize the need for professional help, they often do not follow through.
2) Identify a budget and allow some room for flexibility if people challenges arise
Be aware that the common pricing model consultants charge can include hourly, monthly/quarterly, project-based, or retainer-based rates. Businesses should seek out service providers who offer transparent and competitive pricing, and who can deliver value for money.
3) Outline your desired HR support delivery model
For example, the delivery can be in-person vs. remotely, on-site vs. on-call, and on a regular touch point vs. as needed.
4) Shortlist 3 service providers
Of course, you can go for fewer or more providers.
5) Assess the providers and select the most suitable one
Like a hiring process, you want to evaluate which provider is the most suitable for your business and situation. An experienced HR firm/consultant can help you navigate the complex world of talent management and compliance. Companies should assess the HR provider's experience and expertise. A provider with significant experience in a wide range of HR management and consulting can offer valuable insights and guidance. Previous clients’ reviews, referrals, and consultants’ backgrounds and qualifications can provide valuable information about the quality of service and customer satisfaction.
To ensure optimal outcomes, it is crucial to cultivate a mutually beneficial relationship with the consultant. As your business grows and evolves, HR requirements will invariably transform. Businesses should treat the HR consultants as business partners and apprise them of changes to ensure they remain equipped to cater to these evolving needs.
Check out our Knowledge Library for people and business management insights: https://www.badab101.com/knowledge-library