Companies depend on their HR departments for personnel management. And every aspect of HR influences the employee experience. As a result, organizations are recognizing the vital importance of HR functions and the professionals that implement them. In fact, 70% believe HR leaders belong on their board of directors.
That’s because HR has crucial insights on policy decisions and are already shaping high-level strategic choices.
But exactly what responsibilities does HR handle? Let’s explore them in depth now. Then, we’ll tackle the question of which ones you might consider outsourcing.
Table of Contents
1. What Are the Key HR Functions
2. Effects of Remote and Hybrid Work on HR Functions
3. Should You Outsource HR Functions
What Are the Key HR Functions
We identify 10 core functions that HR departments must handle. We’ll share an overview of each one, covering the main duties involved.
Recruitment and retention
HR spearheads recruitment efforts. What does this entail? HR staff typically search for candidates and conduct interviews. Other managers may sometimes join in on interviews as well. However, HR manages the process and provides vital guidance on the interviewing approach. Further, HR handles the onboarding and offboarding processes.
They also work to boost employee retention. HR may conduct employee satisfaction surveys to find out how to better support staff. They may hold stay interviews as well. And they’ll guide the organization in putting new ideas into practice. This is one of the most important HR functions.
Performance management
HR should guide all supervisors on how to manage employees’ performance. By providing tools and advice, HR can make sure employees receive the right coaching. Performance management software will help managers evaluate progress, for instance. And 360 feedback will accentuate employees’ growth. HR can ensure all employees receive periodic 360 reviews.
HR also oversees the performance evaluation process. This means sharing assessment guidelines with all managers. Further, HR can train them in how to conduct fair reviews. By doing so, HR will help ensure that all employees are treated equally. It’s one of many other key HR functions.
Training and development
HR can plan or find new training that will benefit employees. Then, HR managers can request or allocate funding for these initiatives, enabling staff to participate. They can provide managers and employees with resource lists of these trainings. Plus, they might share information about industry conferences.
Managers should receive continued guidance from HR in how to lead others. HR can conduct implicit bias training with them, for instance.
In certain cases, HR functions like this can help employees with career planning as well. Ideally, employees’ immediate manager will assist them with career planning. But if they need additional support, an HR manager could step in. (Pro tip: Survey employees to make sure they’re getting the career support they need.)
Workplace culture
“HR leaders are the change agents who promote awareness and guide the transition from what the culture is to what it could be,” writes Gallup. Through their role as “culture coaches,” HR staff can play a big role in shaping the workplace climate. By aligning activities with organizational values, they can build the desired culture.
Elements like team structures, workplace norms, rituals, and leadership practices all contribute to this goal.
Employee wellness
Wellbeing has grown in popularity as in terms of HR functions. HR should also work to promote employee wellness. In recent years, wellness initiatives have dramatically increased in popularity. HR can introduce creative new solutions (and solicit ideas from employees). And, of course, HR managers must guide policies on vaccines, boosters, and return-to-work practices.
Compliance and safety
HR must keep company policies up to date with relevant regulations. This means creating, revising, and sharing the employee handbook with all staff. Further, HR should review and update safety guidelines periodically.
HR can also mediate disputes, particularly those related to legal issues. By doing so, HR can facilitate the in-house resolution of problems.
Developing job descriptions
HR also handles creating and updating job descriptions. HR managers might revise job duties as requirements change. And they may update titles to reflect trends and responsibilities. As new roles emerge, they can also work with other leaders to write new descriptions.
HR functions like this one are easy to overlook, but crucial nonetheless.
Compensation and benefits
HR handles administration of payroll and benefits. Plus, they design rewards programs that incentivize employees to succeed. For instance, they may outline the structure of bonuses.
This doesn’t just involve cutting paychecks. HR must first design a pay structure. This begins with market analysis and knowledge of the organizational budget.
Succession planning
Smart organizations plan for succession. HR should be highly involved in the process. After all, HR knows employees’ strengths and weaknesses. HR managers have a high-level view of who is management material. Hence, they’re better positioned than any other manager to make a recommendation.
They should strive to predict and plan for needs gaps whenever possible. For instance, they can respond to an employee’s plan to retire or go on leave.
To succeed at this task, HR must create a long-term staffing plan, as SHRM says. This entails talking with leaders about far-range plans and emerging positions.
Budgeting
Like any department, HR also needs to handle budgeting. HR staff must request and allocate funds for the purposes described above. Then, they must track expenditures.
Each of the categories in this list contributes to employee satisfaction. From enhancing culture to providing training, HR staff will increase employee fulfillment in these ways.
Different levels of HR staff can contribute to each of these functions. In a robust HR department, that looks something like this:
- HR directors will plan strategic decisions on recruitment, budget, succession, training needs, and other topics. For instance, they’ll set the pay structure. In many cases, they’ll work with the C-suite to make such plans.
- Then, HR managers will implement these plans. If tasked with holding training, they’ll find a skilled trainer or design training themselves, for example.
- Lower-level HR staff will follow managers’ direction, handling tasks that support these goals. They might accept and process requests for time off, for instance.
Of course, not every organization has a complex HR structure. Some have a two-tiered structure where the manager essentially acts as director. Others have executive-level roles like chief human resources officer or vice president of human resources. Still others have a flatter structure where everyone specializes in different functions.
Effects of Remote and Hybrid Work on HR Functions
How are HR functions being affected by remote and hybrid work? Here are some emerging trends:
- Human skills like empathy are growing increasingly important. This helps HR build trust across a distance. With the focus on improving employee experience, that couldn’t be more important.
- Managers can’t always directly observe employees fulfilling their duties. So, performance management systems are growing increasingly important. The best HR departments are implementing these solutions and coaching managers on how to use them.
- Organizations seek to upskill their talent due to the tough recruiting climate and need to improve engagement. HR must therefore focus heavily on development.
- Leveraging digital, cloud-based solutions helps teams work more effectively. HR departments are driving these cutting-edge changes.
That’s not an exhaustive list by any means. But it does highlight several main ways in which HR is adapting.
Should You Outsource HR Functions
Many growing companies wonder whether they should begin to outsource HR. They may be a startup with no dedicated HR professionals. “Should we hire HR staff, or can we find another option?” they might wonder. Or, they may be a mid-size company that is rapidly outgrowing its bare-bones HR team.
Further, as they grow, new compliance laws may kick in, notes SHRM.
Often a combination approach works well in either of these scenarios. This means having some dedicated HR staff but also using one or more of these strategies:
- Outsourcing particular functions
- Relying heavily on automated processes
- Using tools that make HR processes significantly easier and less time-consuming.
This enables in-house HR staff to handle responsibilities that require their expertise. As a result, they can use their time more strategically. Meanwhile, they cut down on time spent on repetitive tasks. This greatly boosts efficiency, reduces human error, and improves HR processes.
Which HR functions could be outsourced
Certain HR functions better lend themselves to outsourcing than others.
Administrative tasks like payroll can be outsourced or handled via smart software solutions. Such tasks typically involve a lot of repetition and data entry. Automated processes can cut down on time requirements for HR and employees.
Outsourcing can prove useful when you need a specific type of expertise, too. You may need that expertise for a short time, rather than every day. In that case, hiring a consultant may do the trick. For instance, you may need help designing a benefits plan that complies with regulations.
Additionally, some companies outsource recruiting. They may struggle to secure talent on their own due to changing market conditions. Or, they may have trouble attracting diverse talent. Working with expert recruiters can equip them with the right staff by using inclusive hiring practices.
How to outsource HR functions
Follow these key steps to outsourcing success.
- Look at all the tasks HR handles in your company. Then consider which tedious tasks are taking up a large portion of your time. If they don’t require interpersonal interaction, software may be the right solution. And even some tasks that rely on interaction can be augmented by HR technologies.
- For instance, HR often spends 25% to 30% of its time handling benefits admin. Outsourcing can free up time for other pressing tasks.
- Also, consider the competencies of your HR staff. Do they have a strong foundation in certain specialty areas? Consider nurturing their growth in those areas and outsourcing others.
- Have a main HR generalist to oversee all HR functions, keeping you organized. Importantly, that person (and other staff) can confirm that any automated tasks have been completed. Never outsource or adopt software without having a point person to keep tabs on those functions.
Avoid crafting a “patchwork quilt” of solutions, HBR advises. If you choose cloud-based software, look for one option that meets your needs. Or, find two different options that integrate seamlessly.
- For example, Primalogik and BambooHR work well together, covering different aspects of HR functions.
Smart outsourcing can help HR staff use their time more effectively. Just take care not to outsource their greatest strengths, or you could end up with disenchanted HR managers! Like all staff, they need to know you care about their fulfillment and growth.
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