How Does HR Consulting Work? Is HR Outsourcing Better?

ByContent Manager
HR consulting, HR outsourcing

Human resources is the backbone of all companies. This department impacts all operations and employees. It is integral to everyday business, and managing it can be incredibly complex and time-consuming.

Many companies are realizing that managing in-house HR staff may not be the best option, although with HR services, there is no one-size-fits-all solution. Two key approaches – HR consulting and HR outsourcing – offer different benefits. This information provides an overview of the differences between HR consulting and HR outsourcing to help business owners make informed decisions.

What is HR Consulting?

HR consultants can offer a range of services, such as professional consulting, training, education, and selecting the right human resources solutions for a company. The primary function of HR consultants is to advise clients on how to build more robust human resources policies. These consultants often step in when a company isn’t satisfied with current human resources management. Therefore, the consultant can address policy deficiencies and offer solutions that will benefit the company.

Common topics that HR consultants address include:

  • Rewriting or refining policies and procedures and creating best practices
  • Steering compliance with tax and legal requirements
  • Resolving employee grievances and addressing risk management
  • Providing guidance on benefits and compensation
  • Developing employee training and development programs
  • Reviewing an organization’s structure

HR consultants are a great option for companies that want to keep HR operations in-house but recognize that they need better policies. These consultants can help implement more effective and efficient human resources management. Unlike HR managers, consultants often work on a contractual basis, which means they usually have multiple clients and cannot dedicate the entirety of their time to your business. Additionally, they often have a specified timeframe in which they will work with your business, and at the end of that time, they move on to other opportunities.

Despite these limitations, HR consultants can be good for many companies, particularly:

  • Small businesses or non-profits that need improvement with their HR process, systems, and training
  • Growing organizations that are rapidly expanding their workforce and need guidance related to talent acquisition, performance management, and employee relations
  • Companies that want to improve turnover rates, employee morale, or compliance issues
  • Organizations undergoing mergers, acquisitions, or reorganizations
  • Companies operating in highly regulated industries
  • Businesses that want guidance related to technology for greater efficiency and cost benefits

What is HR Outsourcing?

Unlike HR consulting, HR outsourcing is a solution for companies that would prefer to keep all their HR operations outside the company. It is an arrangement that involves hiring an external company to manage some or all of your company’s HR functions. Companies can develop a comprehensive and complete HR plan or select specific services from their HR partner. Common HR functions that are outsourced include:

  • Payroll processing
  • Benefits administration
  • Recruitment and staffing
  • Training and development
  • Compliance and legal guidance
  • Employee relations, such as workplace conflict resolution
  • Employee performance management

HR outsourcing is very different from HR consulting. While HR consulting focuses on providing guidance to organizations on many HR topics for a defined time period, HR outsourcing contracts some or all HR functions to an external provider. In many instances, outsourcing these tasks can reduce costs and improve efficiency. It can also shore up any compliance deficiencies, and in many cases, your business will have a point of contact that you can reach when you need something. Additionally, there is no pre-determined time for when they will exit and stop working with your company. You may also find that you can grow your relationship with HR outsourcing as the needs of your business change. Even if they work with multiple businesses, you have access to specialists who can address your specific needs.

Is HR Outsourcing Better Than HR Consulting?

The question of which strategy is better – HR consulting or outsourcing – can be a complex one to answer. It often depends upon many factors specific to any company. For instance, if your company already has a robust team of HR professionals and you simply need a little guidance to tighten up policies and procedures, then working with an HR consultant may be the best option. Also, if your company is growing and you would prefer to keep most HR functions in-house, an HR consultant could be your best bet at achieving that goal.

Similarly, there are certain scenarios where HR outsourcing makes more sense. For instance, if you have a small or mid-sized company and are struggling to understand compliance or get payroll done accurately and on time, then outsourcing could be the best way to enhance your HR functions. Or, you may be looking at ways to cut costs and improve efficiency – HR outsourcing can often help many companies achieve these goals.

The reality is that choosing between HR consulting and HR outsourcing is often not a black-and-white issue. To learn more about HR outsourcing and HR consulting and how to determine your best option, contact CA HR Services today!

CA HR Services specializes in working with small and medium-sized companies to help develop legal, efficient, and appropriate H.R. processes and procedures that meet state and federal labor law requirements.