Productivity Blog
Should Companies Outsource HR to be More Strategic, or to Save Money?
By Erik Samdahl from i4cp | June 9, 2010
Outsourcing some or all HR functions is widespread among businesses, but the reasons for doing so vary widely when comparing the practices of higher-performance organizations to their less successful counterparts.
A new study from the Institute for Corporate Productivity (i4cp), conducted on behalf of one of its member organizations, revealed that standardizing processes and reducing costs are the most common factors considered when deciding to outsource HR functions. In stark contrast to these overall results, however, high-performance organizations - companies that have outperformed their competitors in profitability, revenue growth, market share and customer satisfaction over the last five years - place these factors among the bottom three considerations when making outsourcing decisions, joined by "improving self service."
"High-performance organizations are more likely to select outsourcing solutions that will make a significant business impact, where other companies are still more concerned with basics like cutting costs or simply making things easier," said Jay Jamrog, SVP of Research at i4cp. "In other words, i4cp research shows that the best companies use HR outsourcing to make a strategic impact."
When considering whether to outsource human resource functions, high-performance organizations tend to look for solutions that will improve productivity above all other factors. Sixty-two percent say they do this to a high or very high extent, while only 47% of lower-performing organizations say the same. In addition, higher performers outsource HR functions to achieve better ROI (58%), compared to only 34% of lower performers.
The biggest gap between high and low performers, however, involved improving the strategic position of HR. Fifty-two percent of high-performance organizations outsource HR in order to place greater focus on strategic HR initiatives, compared to only a quarter of lower-performing organizations.
The HR Outsourcing Pulse Survey was conducted in April 2010. The full findings are now available to i4cp members, and provides insight into the functions that high-performance organization are most likely to outsource as well as their satisfaction with the most common HR outsourcing vendors in 401(k) administration, COBRA administration, compensation, payroll and several other core HR functions.
A new study from the Institute for Corporate Productivity (i4cp), conducted on behalf of one of its member organizations, revealed that standardizing processes and reducing costs are the most common factors considered when deciding to outsource HR functions. In stark contrast to these overall results, however, high-performance organizations - companies that have outperformed their competitors in profitability, revenue growth, market share and customer satisfaction over the last five years - place these factors among the bottom three considerations when making outsourcing decisions, joined by "improving self service."
"High-performance organizations are more likely to select outsourcing solutions that will make a significant business impact, where other companies are still more concerned with basics like cutting costs or simply making things easier," said Jay Jamrog, SVP of Research at i4cp. "In other words, i4cp research shows that the best companies use HR outsourcing to make a strategic impact."
When considering whether to outsource human resource functions, high-performance organizations tend to look for solutions that will improve productivity above all other factors. Sixty-two percent say they do this to a high or very high extent, while only 47% of lower-performing organizations say the same. In addition, higher performers outsource HR functions to achieve better ROI (58%), compared to only 34% of lower performers.
The HR Outsourcing Pulse Survey was conducted in April 2010. The full findings are now available to i4cp members, and provides insight into the functions that high-performance organization are most likely to outsource as well as their satisfaction with the most common HR outsourcing vendors in 401(k) administration, COBRA administration, compensation, payroll and several other core HR functions.
Comments
Among those outsourced HR outsourcing services, the most common were payroll and taking control of benefits in either partially distributed responsibilities or in a complete basis. Although this can only be few of those HR functions. Many thanks!
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