Managing Internally vs. Outsourcing

~ Robert J. Greene, PhD

Managing human resources internally has advantage and disadvantages. So does outsourcing human resource decisions and processes. Let’s look at the pluses and minuses of both approaches:

Managing Internally
Advantages

  • Staff dedicated full-time to organization
  • Staff familiar with culture/context
  • Easier to control staffing levels and expertise
  • Tends to be less expensive
  • HR agenda can be controlled/ varied by management

Disadvantages

  • Expertise may not extend to specialized areas/issues
  • Locked into fixed costs of full-time staff
  • Political pressures may impact professional advice
  • Harder to stay abreast of developments in the environment

Outsourcing
Advantages

  • Can control resources used based on current needs/workload
  • Can use only specific skills required without incurring fixed costs
  • Maybe free of political pressure
  • Provider can afford to employ specialists
  • Provider can learn from experience with other organizations

Disadvantages

  • Provider not familiar with the “unwritten rules” (culture)
  • Usually more expensive
  • The organization may not be a high priority to provider
  • May result in loss of expertise in HR
  • Subject to external change (i.e., merger of provider)

An excerpt from:“Can The Rewards Management Function Do Better By Doing Things Differently?” by Robert J. Greene, PhD
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