Last week I wrote about human resources management in a small firm. The feedback I received from Professor Bassett is that many small firms "mismanage" their HR rather than managing HR effectively, and this leads many small firms to outsource their HR departments. Given that trend, this week I am going to briefly discuss the pros and cons of outsourcing HR management.
First, several benefits come with outsourcing HR management to a third party.
Outsourcing HR can be a huge time-saver for a small firm. As I addressed last week, the tasks that come with effective HR management take time away from "actual work" that generates revenue. Handing those responsibilities off to a third party gives attorneys more time to spend on the billables.
Small firms can stop stressing about complying with employment laws and regulations when they outsource their HR management to a thirty party, and can instead rest easy knowing that they will not be liable for any miscues (assuming they were careful in choosing the HR company). Companies dedicated to HR management also have knowledge and expertise not typically found in a small law firm.
What are the potential downsides of outsourcing HR management in a small firm?
Loss of control. Outsourcing your HR management to a third party means that you are no longer the decision-maker for your HR procedures. This can lead to the second potential downside, dependency.
A small firm that outsources its HR may become dependent on a third party, never learning how to manage HR effectively. If the firm is going to maintain its size long-term, this is likely not an issue; but if the firm is going to grow over time and gain many employees throughout its life, it may be beneficial for the leadership to invest in an internal HR department rather than continuing to lean on a separate entity for that portion of its business.
Lastly, an HR management firm may offer only standardized solutions that are not aligned with the unique needs of a small firm.
Overall, it seems that the benefits of outsourcing HR management outweigh any potential downsides, especially if the firm is going to employ a relatively small amount of employees.
Spencer, this post is really informative. I personally think the cons of outsourcing outweigh the benefits. Having control over how your employees are onboarded seems essential especially in a law office where conflicts of interests need to be addressed. Also, if the office switches HR management firms, they've lost a sense of uniformity within the office. I think it's better for law offices to learn the skills of managing HR in-house and developing them over time.
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