When small and medium sized business seek an HR business partner, often what they are offered is an opportunity to transfer their employment law risk. The nature of these arrangements is a phone line, staffed by paralegals offering ultra-cautious employment law advice. Frequently the focus is on protecting the interests of the employment practice insurance company.

However, I believe HR outsourcing can create an opportunity for the business to work with an HR Business Partner. Unfortunately, outsourced HR often comes in the form of help desks and pro forma documents, where the focus is on rigid procedural advice, and a conservative approach to managing staff.  There appears to be no attention to the development of HR systems and processes that support the strategic business aims of their clients. However, there is another way. A way in which small and medium sized business can find an HR partner who will support them in achieving their business objectives. I call this HR Business Partnering. I believe there is a space in the market for outsourced HR Businesses to offer Business Partnering to small and medium sized businesses.

According to the CIPD there are many varying definitions of HR business partnering and, where HR business partners operate, there are wide variations in their role. The model of HR business partnering I am proposing for small and medium sized businesses is different (but not radically different) to, say, the business partnering model that may operate in a large PLC.

How will HR business partnering work for small and medium sized businesses?

I believe that the ‘three-box’ model for HR, put forward by Ulrich, can be adapted to meet the needs of small and medium sized businesses.

I am proposing an HR business partnering model based on 3 key elements:

1. HR Business Partners

2. HR expertise and

3. Shared HR services:

•    HR Business Partners – in the model I am proposing, the outsourced HR provider has HR professionals who work with the client’s management team. The focus of these business partners is to support clients in meeting the needs of their business. They are not “loss adjusters”, acting in the interest of an insurer, but true business partners, acting in the interest of the client’s business.

•    HR Experts – in the model I am proposing, the outsourced HR provider has a small teams of HR experts with specialist HR knowledge. Small and medium sized businesses can tap into this know-how to help them achieve a competitive business advantage. As well as employment law expertise, there will be expert knowledge in areas such as pay and reward, performance management, employee engagement, and learning and talent management.

•    Shared Services – in the model I am proposing, the outsourced HR provider will invest in the creation of an HR infrastructure to handle all the ‘transactional’ HR services for its clients. This will including recruitment administration, HR record keeping, ensuring regulatory and legal compliance, absence monitoring and routine advice on employment matters including, employment law, employment policies and terms and conditions of employment.

Fundamental to this model is an outsourced HR Business Partner who invests heavily in sophisticated cloud based HR information systems. This will include an Applicant Tracking System, an HR Records and Information System, a Document Management System, and a system for knowledge management to allow the outsourced HR provider to leverage know-how and best practice in the interest of their clients. As a result of the economies of scale and scope delivered through the client base, the sophisticated HR infrastructure has a low unit cost to the client. As a result of this, the outsourced HR provider is able to offer its clients low-cost, effective HR administration and support. The delivery of these “shared services” can achieve real business efficiencies, and succeed in delivering significant savings. In the modern competitive environment, businesses should demand more from their HR partners in terms of contributing to their business strategy, supporting the delivery of business plan goals, and delivering tangible commercial benefits.

True Business Partners look outwards to their customers, not inwards at their systems.

The systems that the outsourced HR business partner offers must be robust and fit for purpose. However the people who deliver the systems must be flexible, understand the environment in which their client’s business operates, the culture and climate of the client’s business, and the context in which organisational and business events take place.

Good outsourced HR Business Partners must understand the client’s business and its commercial agenda. To succeed, outsourced business partnering for small and medium sized businesses has to deliver value for money. That is why, in my view, to make this model attractive to small and medium sized businesses, the outsourced HR provider must:

• Have a customer centric ethic based on collaboration and problem solving, not just risk avoidance.

• Have a network of contacts and associates with expertise that includes, but go beyond employment law and encompass the full range of HRM and HRD knowledge and skill. This network must be accessible, flexible when necessary, but not carried as an overhead which is charged to clients who don’t need it or use it.

• Make a significant investment in a robust and reliable HR infrastructure. This infrastructure, when shared amongst the HR Business Partner’s clients, offers economies of scale and scope hitherto only enjoyed by large businesses.

This article has been posted by Sean McCann, the Managing Director of People Based Solutions an HR consultancy specialising in delivering outsourced HR solutions and being the HR Business Partner to small and medium sized businesses. If you would like to know more about how we can help you manage you transactional, operational and strategic HR systems, policies and procedures contact us at: enquiries@peoplebasedsolutions.co.uk