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Why should small businesses outsource their HR?

Human resources can be difficult to tackle for a small business that’s starting out. In this article, we’ll have a look at the challenges that come with the decision of outsourcing HR.

As a small business or startup founder, it's common to think that you can do it all: grow your team, look after compliance and craft a great company culture.

But without an HR team to help, it’s a struggle to get everything done, and that’s why outsourcing some of your HR responsibilities could be the solution to stay on top of it.

Perhaps after some online research, it’s still hard to understand what the options are, how beneficial they could be, or how much time and money they would save.

In this blog post, we’ve listed the pros and cons of outsourcing HR functions to help you make a well-informed decision.

What is HR outsourcing?

HR outsourcing is when a business delegates HR tasks to a third party that specialises in one area of expertise (for example recruiting or payroll) or handles all of HR on behalf of the business.

How do you outsource HR functions?

Choosing a way to outsource HR depends on how fast your company is growing and how many adjustments your current processes need.  

Here are the two main solutions you can choose from to start outsourcing HR as a small business:

  • Using self-service HR software that helps you automate repetitive HR tasks, so you get rid of the manual processes.
  • Hiring an HR advisor or consultant to help create HR policies that will sit in an employee handbook, check your business is compliant and provide advice to craft your culture.

What are the benefits of HR outsourcing?

Outsourcing Human Resources saves you time

When working at a startup or small company, it’s common to wish you could squeeze more time out of your days.

With HR to look after, it can soon become impossible to focus on the rest of your responsibilities. One solution is to outsource parts of these two time-consuming HR processes:

  • Onboarding admin
  • Managing time off

Onboarding new hires can be an ordeal with no processes in place when your startup is scaling up.

Instead of having to dig through different parts of your drive, perhaps HR software could help you delegate some tasks to the system.

With Charlie, for example, you simply have to send a one-click invite to your new hire’s inbox so they can sign up, upload their documents and fill in their details to hit the ground running.

Why outsource HR - CharlieHR onboarding flow

You can even let them flip through your company handbook straight away so they get introduced to your ways of working.

Why outsource HR - company employee handbook CharlieHR

The handbook cuts through initial questions right off the bat, leaving you with more than enough time to focus on making the next onboarding stages successful.

Bear in mind that creating HR policies for your handbook takes time and expertise, so perhaps that’s where an HR professional could help.

Click here to book a call and understand why you should outsource HR

Time off management is pretty straightforward when you’re just a team of two or three, but it’s another time-consuming aspect of HR that can soon become a problem when your team is growing.

"Dealing with time-off, especially with part-time employees, is a constant back and forth between calendars, sheets, and scattered records. It ends up eating up hours of your day!" Chris Richards, Century Tech

With HR software like Charlie, you can get all these tasks performed for you by checking time off at a glance and approve or deny requests in one click.

Why Outsource HR - requests
“With Charlie’s Calendar, I know I've got one place to check what’s going on in the team — who's going to be away, when and for how long. It has a real impact on the work we commit to as a company week by week.” James Gill, GoSquared

Outsourcing HR fills the skills and security gap

Employees in charge of HR at startups or small businesses are often not CIPD qualified which means they lack knowledge around some crucial aspects of HR.

Without the right expertise, there can be a lot of anxiety around knowing how to make your HR legally compliant or handling difficult situations with employees.

To make the right decisions for your business, perhaps you could look for advice from HR experts like the ones at Charlie to ensure you do everything by the book.

Click here to get advice in times you need it most

Getting professional advice on employee issues or HR best practices is a good idea, but you’ll also need your secure day-to-day tasks to protect your company.

To smooth down the process, you can perhaps use software like Charlie (ISO 27001 certified and GDPR compliant) to control permissions and protect sensitive information.

Outsourcing HR makes your team a priority  

A lot of startups or small businesses often mistake culture for an abstract concept or one you can’t work on, but sometimes it’s just a matter of outsourcing the culture-building expertise you’re lacking:

  • Creating forward-thinking policies to attract and retain your best talent
  • Structuring your team’s career development to expand skills and encourage progression

HR policies get a bad reputation for being a stack of tedious documents, but they’re at the core of building culture at a new business or startup.

Reinforcing your employer branding with forward-thinking policies about well-being, remote working, or mental health is key to attracting the best talent.

That’s why choosing an HR partner that aligns with your vision to help you write your policies can really spur your culture on.

At Charlie, for example, our HR advisors specialise in supporting small businesses and startups to help them create a bespoke company handbook that’s the right fit for their business.

With that handbook, companies ensure they get their message across to team members clearly and smoothly with a guarantee that everyone is heading in the right direction.  

“We would much rather partner with people that have a similar mindset and values than going with partners that don’t understand what it is like to be in that energetic startup world. We like to have deep partnerships with people who see the world the same way that we do.” Ben Wharfe, Fiit

Building a company culture where employees can thrive also means creating a space where they feel supported by their managers and know what goals to work towards.

Perhaps that’s where a career progression framework could come in handy. By building a clear set of expectations with the help of an HR professional, team members get a sense of purpose towards their career goals.

Click here to keep your team in for the long haul with career progression framework

Progression, however, does not happen with informal chats and coffee breaks. Team members need structure to narrow it down.  

That’s why conversations, where both managers and employees have the chance to share honest feedback, need to happen.

With Charlie, our performance reviews tool allows you to implement continuous performance management by regularly rolling out impactful conversations for your teams, so no one ever feels left aside.

Why Outsource HR - performance reviews

Outsourcing HR saves money

As a small business or startup, outsourcing HR also means having to focus on more practical aspects such as resources.

It can be hard to find an HR outsourcing solution that meets all your requirements as well as your budget when you’re starting a business.  

Let’s have a look at how three of the main HR outsourcing options compare:  

CharlieHR comparison why outsource HR
*Includes CharlieHR Software and CharlieHR Advice for medium-sized teams (between 10-100 people). The software alone costs £4/employee per month. For more information on our pricing, have a look at this page

Once you’ve had a look at what the market offers, you can make a decision based on what you need and what you can afford.

“I felt really comfortable with CharlieHR and the advisors, so I did some basic math and compared the relationship I had with the employment lawyers. It was an easy decision.” Giulia Vaccari, Scriberia

Shortlist the best solutions you could find to outsource HR and sign up for a free trial like the one we offer at Charlie.

What are the cons of HR outsourcing?

Giving up control when you’ve been dealing with HR so far can be scary, and you might be worried about:

  • Not having an in-house expert who knows the company and the industry to take care of day-to-day tasks and difficult situations
  • Wasting time by having to deal with different advisors to solve one problem

Bear in mind hiring a full-time employee can often be a long process and your HR tasks might not fill an entire week of work.

Perhaps that’s where getting a dedicated advisor to help you on an ad-hoc basis may be a good compromise.

At Charlie, for example, you can speak to our advisors via chat, email, or phone whether you need support for a difficult situation or if you have a question.

If you fear having to juggle between different advisors each time you need advice, Charlie also assigns a dedicated HR expert to each business so they become their main point of contact.

That way your issues or questions are passed around as your advisor knows the in’s and out’s of your business and can provide tailored advice to any of your problems.

“With HR Advice from Charlie, it’s like having an extra member on your team. You have that kind of expertise you can lean on and tap into whenever you need it, without needing to hire someone in the business.” Ben Wharfe, Fiit

We hope this blog has given you enough information to get familiar with the nitty-gritty of HR outsourcing, but if you want to find out more, perhaps you could start a free trial of CharlieHR today.

You may also be interested in why a small business needs HR software.

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