It takes a dedicated professional to lead critical human resources initiatives; a professional that many organizations do not have the luxury of employing in-house. If your HR needs are keeping you from advancing your mission, you might consider outsourcing some or all of your human resources functions. Outsourcing could give your staff more time to spend on your nonprofit’s other core duties, mission-driven programs and strategic plans.
As you consider your options, keep the following in mind:
Weigh the benefits
Start by identifying which HR functions you might outsource. A good guideline is to consider which functions are labor-intensive for your organization or for which you could utilize the additional expertise an outsource partner might bring to the task. Take a look at recruiting, training, employee engagement, strategic human resources planning, benefits planning and administration, compliance monitoring, performance reviews, compensation analysis, and employee handbook creation. These are all labor-intensive responsibilities where expertise counts. Transferring all or some of them to the right outside party can vault your organization to a higher level of professionalism and efficiency in those areas.
The move also might result in improvements. For example, an HR consultant is likely to have more tools, contacts and time to spend recruiting new employees than your own organization has.
Calculate the costs
Let’s face it: You’ll appreciate the savings in staff hours created by a decision to outsource, but the primary draw for most not-for-profits is reduced costs. You’ll need to perform a cost-benefit analysis, and your CPA can assist with this step. Even if the cost is more to outsource, you may decide that the extra dollars are worth freeing up staff hours for other initiatives.
Prepare to launch
Once you’ve researched and met with outside service providers (see “What to ask an HR consulting firm” below for some tips), you’ll want your attorney to review the contract.
And after you’ve committed, but before you make the big change, be sure that you have controls in place to monitor the quality of the new arrangement. Your CPA can assist you with this. Also appoint one or more individuals to test those controls regularly.
Look to the future
If you’re happy with your new arrangement, you might want to explore other areas of your operation as possible outsourcing candidates. Those could include bookkeeping, controllership, payroll, financial management, purchasing, IT or marketing and communications.
What to ask an HR consulting firm
Before you choose a firm to handle your human resources function, you must do your homework. The Nonprofit Coordinating Committee of New York, comprising about 1,500 nonprofit managers and leaders, suggests asking these questions in person to three service provider candidates: