Nonprofits: Outsourcing HR Could Save Time and Money

By: Helen Weeber

August 3, 2023

Employers who outsource human resources are no longer outliers. According to software vendor ZipDo, around one-third of US employers outsource at least one HR function. With good reason: Many HR responsibilities, including benefits administration and recruiting, are increasingly complicated and specialized. If your nonprofit’s HR department is still attempting to do everything in-house, you may want to consider delegating some tasks to outside professionals.

Potential Savings and Other Advantages

First, determine which HR tasks you will outsource — for example payroll; benefits planning and administration; leave management; recruiting; staff training; performance reviews; and diversity, equality, and inclusion (DEI). These can all be time-consuming tasks that require expert skill. Transferring all or some of them to the appropriate third party could propel your firm to an increased level of professionalism and efficiency.

Evaluate potential savings and other benefits next. Even if outsourcing costs more, you may determine that the extra money is worth freeing up employee hours for other activities. Consider the disadvantages of outsourcing. Certain jobs may necessitate an understanding of your organization’s culture and history in order to be completed effectively. You should also consider the consequences of dismissing existing HR personnel.

Vetting Vendors

Before you start vetting HR contractors, make sure you get buy-in from your management team and board of directors. When you begin screening suppliers, inquire about the scope of their services, the length of time they’ve been in business, and the number of nonprofit clients they have in your sector that are of a comparable size.

Before you select a vendor, make sure you understand what and how it charges, such as by the hour or on a retainer. Also, specify if services will be provided on-site, off-site, or a hybrid of the two. It’s also critical to establish shared expectations, such as the supplier’s expectations of your staff and board. Once you’ve decided on a vendor, have your lawyer review the contract before signing it.

Have You Been Stretched Too Thin?

If you’re still uncertain, consider the following troubling statistic: According to the Society for Human Resource Management, approximately 75% of HR practitioners believe their department is overburdened. Even if you don’t think outsourcing is the best option right now, talk to your HR manager about workload issues. Unhappy HR employees can have a negative impact on the morale of your entire business and your nonprofit’s capacity to serve customers.