Take A Load Off!

Do you surrender control over your employees when you outsource? That's a large worry of many entrepreneurs, but Dushinski says it doesn't have to be. "I haven't lost any control," she says. "The outsourcing firm only does what we instruct it to do."

More broadly, when outsourcing HR, "You want to retain control over the what; the how becomes the job of the consultants you hire," says Greg Hammill, COO of Morristown, New Jersey-based Talent Alliance, an organization that specializes in developing career-management solutions for employees of corporate clients. "For instance, many companies are now outsourcing all of the hiring process. Consultants are running ads, screening applicants and doing background checks, but the hiring decision is left to the employer."

"In deciding which functions to outsource and which to keep in-house, the key question is: Is this strategic to us?" says Hammill. "When the answer is yes, companies should keep doing the job themselves."

For a more precise view, USC's Lawler surveyed more than one hundred companies to find out just what HR activities they were outsourcing. His findings show 87 percent outsourced benefits administration and 63 percent outsourced training, while 2 percent left other HR concerns including the number of hires and program implementation to outsiders.

You have to make your own decisions about what should be outsourced. At MarketAbility, for instance, its outside firm handles compensation and benefits administration and some employment issues (including drafting an employee manual, creating offer letters for new hires, and offering guidance on interview dos and don'ts). Either way, entrepreneurs should retain control over functions that are critical to your relationship with your employees, says Lawler.

Few businesses would outsource decisions regarding merit pay increases for individual employees, for example, but other decisions may be best left to the pros. "An outsourcing consulting firm can provide useful data on salary trends for particular positions," says Bourgeois. "They have readily available information, whereas it's frequently impossible for an individual business to [easily] compile it."

This article was originally published in the August 1999 print edition of Entrepreneur with the headline: Take A Load Off!.