Five reasons SMEs waste money on HR consultancy

Here, Kate Russell outlines the main ways HR consultancies can let you down.

Business guru Peter Drucker said ‘Do what you do best and outsource the rest’. Wise man. For most small businesses it makes sense to buy in some services on as ‘as required’ basis and HR is a prime example of where you need some help sometimes. Like everything else you buy, the service needs to work well and efficiently for you. If not at best all it does is cost you money but not much else. At worst, it weakens your situation and may even expose you to risk.

To ensure that your outsourced HR provider enhances the health and wealth of your company (and yours come to that!), avoid the following five mistakes.

Poor quality service

One of the main mistakes is to fail to ensure you get really high quality service. Some outsourced HR companies take a one-size-fits-all approach. Whenever we inherit another client from one of these companies I could tell you exactly which one it was by looking at the paperwork! Handbooks, terms of employment etc they’re identical. All they do is change the company name.

A good outsourced company will take the time to understand your business and what you want to achieve. Satisfy yourself that its consultants are practical and business-driven; that they can respond quickly. Make sure you know that your outsourced partner will take time to understand your requirements.

Lack of flexibility

Will your HR provider give you the flexibility you need? If you want help with a tricky situation you want the comfort of someone who will come to site to support you. If you sign up with a provider that only offers phone advice you’ll have to pay twice to get someone else to come to you. Do they think out of the box when it comes to solving your issues?

Poor quality advice

Too much HR advice is correct but flabby. In my view the overly-cautious style of advice generates more problems than it solves. You want to know what you can do, not what you can’t do. To avoid mistakes insist on a provider with a very practical approach.

Find out whether the consultants have the skill sets to meet your requirements and their knowledge is current (employment law changes furiously quickly). As part of this investigate the skills and capabilities of the advisors. How well are they qualified? How do they keep up to date? Test them a bit.

Long contracts

Some companies require you to sign up for five years and give six months’ notice by a particular date to terminate the contract. Some prisons are easier to escape from! You should be able to walk away if things don’t work out, rather than stay chained to an unwanted provider and/ or paying twice to

Insurance cover

It’s tempting to go for a company which has an insurance hedge against tribunals. Except that all the advice given is in the interests of avoiding tribunal claims rather than protecting your business. Don’t underestimate the frustration that you can suffer when you just want to bring a protracted process to a conclusion and your advisor says that you need yet another medical report …. Do you need separate insurance? Probably not. A good quality provider will give you advice that limits your risk and if you check your business insurance you may well find that legal costs are already included in that. Why pay twice?

So how can you get it right?

The key things you will be looking for are advice and support given is expert, practical and delivered on time. It’s important to explore if the two businesses can work successfully with each other.

Ask the following questions before reaching your decision:

  • The best route is recommendation. Ask your business friends and colleagues if they can recommend anyone from their own experience.

  • Ask them for a demonstration of their advice. Seeing is believing.

  • What is their client retention rate?

  • How does the service work? What does it include?

  • Will the prospective provider educate your managers? How? How often?

  • Do they have a guarantee of satisfaction?

  • What hours/days will they be available by phone, e-mail, or instant chat? What is their standard for returning phone calls?

  • What options will you have for reaching them in emergency situations?

  • Have they got enough resource to meet your needs?

  • What are the qualifications and experience of personnel who are involved in providing this support?

  • What makes them better than other outsourced HR companies?

  • What is their track record on tribunal cases?

  • What are their cancellation terms?

Further reading on HR

Related Topics

Small Business HR

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