Outsourcing to facilitate HR’s transition from operational to strategic
They say that old habits die hard—but Intertrust, a company who provides specialised administrative services to multinational corporations and high-net-worth individuals worldwide—asserts that it is imperative that HR departments need to shift their focus away from traditional operational work to strategic functions. Speaking exclusively to HR Magazine, Christian Heinen, Managing Director, Intertrust Greater China shares advice on why change is crucial for businesses to excel and why HR needs to be at the forefront of driving that transition.
HR’s transition
The transformation of HR from a traditional back-office operational role into a strategic function, with an increasing presence at the board table, is well documented. Over the last decade, it is not just the roles of HR that have grown substantially, the expectation of what HR should be delivering has also risen dramatically. As well as fulfilling all the traditional duties such as hiring and payroll, HR are now also increasingly expected to lead on training and development, retaining key employees, building a sustainable talent pipeline, as well as driving strategic HR and change initiatives. As part of this journey, a seat at the board table is no longer ‘preferable’ in HR. It has become ‘essential’ to enable proper strategic input directly linked to the business objectives. Unfortunately, in many organisations, the time and resources afforded to the HR team are somewhat lagging leaving many HR departments stretched to—and in some cases beyond—breaking point. This has grave implications not only in terms of HR capability but also from a wider business perspective.
Heinen noted this overburdening of HR presents numerous challenges to the business as a whole. The overburdening of HR means that businesses are not able to function at their optimum. By being underequipped, HR does not have the time or resources to drive strategic initiatives, support business development and complete core administration tasks at the same time. As a result, senior management gets sidetracked from core tasks when they have to deal with these problems because HR is overwhelmed.
Outsourcing to free up HR
The job of any successful HR team is reliant upon empowering line managers and department heads to continuously interact with frontline staff, and understand the skills and tools they need to carry out their duties. By garnering feedback in this way, HR is then best positioned to provide input as to future strategic development of the organisation, in the best direction forward for talent management. The challenge is achieving all of this with limited time and resources. To meet this challenge, it is now becoming the ‘norm’ for HR to outsource certain functions within their remit to reduce operational burdens and free up greater resources for them to focus on more strategic tasks that better drive business success.
Leading the way in strategic HR
One area where many in HR are already sourcing external help relates to their payroll systems—where complex logistics and compliance issues can often soak up a huge amount of time for HR. Heinen explained some of the benefits to HR in outsourcing payroll systems, “The classic arrangement is that the client outsources the payroll to us and we maintain the system—but there are two potential extra layers to this. On one level, you can open this system to make it available to the HR department 24-hours a day, seven days a week. And on another level, we can also open the system up to individual staff members so they can self-access their personal records—indeed the trend is going this way.”
A payroll system, such as FlexSystem’s FESA Human Resources, offers the flexibility for HR, and indeed employees, to access records when and how organisations want, without the costs of the organisation having to establish and maintain a Human Resources Information System (HRIS) itself.
As part of the ‘next step forward’, HR should now be looking to work together with competent external partners who can assist them from a number of angles. Firstly, in analysing the whole business system and advising on which functions are best kept in-house and provide input on the most effective ways forward in terms of future HR strategy. Secondly, in terms of saving money—by reducing the need to purchase, upgrade and maintain HR systems. Thirdly, in terms of saving time and resources by not having to train up and allocate talent to perform operational HR tasks. Heinen noted that with this external help, “HR can focus on core strategic functions like getting the best talent in place, developing them and planning succession.”
Inspiring cultural shift
Outsourcing HR functions does not come without its own challenges as it often involves overcoming internal inertia to bring about the cultural shift required. Heinen emphasised the importance of proper Change Management.
He compared it to trying to quit smoking, “People know smoking shortens your life, but people continue to do it despite knowing they will live five years less. Smokers know that to stop smoking would be good for them, but despite this, it is difficult to change habits. Implementing a new system or way of working is a bit similar. It is clear that it has advantages but it requires a first effort.”
He added, “It is more than simply making a nice sales pitch to future users. It’s about inspiring and convincing that, in the end, change will make the company more effective, less risky, more efficient, more future-proof and provide a greater return on investment. This message should not only come from a few low-level advocates—it also needs to come from management.”
Technical and operational considerations
Initiating change is not only about understanding and managing cultural shifts—it also frequently involves highly technical processes that require expert knowledge, skills sets and professional acumen. HR must also help facilitate the operational shift, particularly where new technology is involved. Migration of data and conversion of the data into a suitable format can be a thankless task. Inevitably, questions arise around expectations and what is expected from a new HR system and where the organisation wants to be after implementing change.
Once a suitable partnership with an external consultant has been established, this can give access to a raft of external expertise which is invaluable to HR. For example, having experts who are up-to-date on regulations and trends in HR helps ensure the most suitable business practices are implemented right from the get-go—saving time and massively reducing the risk of making mistakes legally and having to deal with resultant litigation.
With operational HR taken care of by external partners, not only does this save time and resources, it also unties HR’s hands leaving them free to do what they do best. The freedom outsourcing brings, allows HR to focus on strategic direction and on working with the C-suite to have proper HR policies and practices and cultures in place to future-proof the entire organisation and drive the bottom line.
Christian Heinen, Managing Director, Intertrust Hong Kong
It's about inspiring users that, in the end, change will make the company more effective, less risky, more efficient, more future-proof and provide a greater return on investment.
Paul Arkwright
Publisher
