A Telegram channel about accounting and HR outsourcing for those who want transparent, manageable business processes
We share case studies, explain legislative changes and show how automation and outsourcing help businesses grow.
Imagine you have outsourced HR administration and are quite happy with the provider. Then you learn that another company has implemented an HR portal and automated most of its processes. The question arises: is your provider actually working efficiently?
The simplest way to start is to work out what you and your employees expect from your HR department and how it can be measured. After all, an outsourcer is essentially your HR department on a subcontract, and the same KPIs can be applied. But dry numbers are a poor measure of real efficiency. In this article the director of the payroll and HR administration outsourcing department at UCMS GroupNatalia Alenichevashares which criteria say more about efficiency.
Efficiency cannot be assessed without a clearly set goal, that is, without understanding what result you expect from the outsourcer. It is important to state the goal not in abstract phrases like "quality service" but with a clear understanding of what that means for you. All companies basically want the same thing: quality, customer focus, security. But everyone puts their own meaning into it: for some companies quality means the absence of errors, for others it means continuous improvement. And it has to be measured differently.
It is also important to remember that some indicators are measurable, for example response speed or the number of errors in documents, while others cannot be objectively assessed. But a subjective assessment also has a right to exist: outsourcing is first of all about service, and you may or may not like it regardless of the numbers in the reports.
| Goal | How to measure |
|---|---|
| Ensure process continuity so that employees do not wait two weeks for certificates because the HR administrator is on vacation. | Assess the speed of response to employee requests and whether there were service outages. |
| Reduce the number of errors and problems during inspections | Track the percentage of errors in documents and certificates and the number of findings from regulators. |
| Reduce the cost of HR administration | Compare the total cost of HR administration before and after outsourcing, including payroll costs, operating costs and others. |
| Optimise HR processes and reduce routine work | Compare how long it takes to prepare HR documents before and after outsourcing HR administration. |
| Ensure the confidentiality of sensitive information | Track data leaks. |
The examples above are only general recommendations, and your company's situation may be different. Every company has its own metrics and satisfaction indicators that reflect how well HR serves its employees and management.
Fix the goals in the SLA
At the start of the work, discuss your goals with the outsourcer and describe them in detail in the service level agreement (SLA), fixing the KPIs by which you will evaluate performance. A good provider will help define the relevant metrics itself.
Even if the outsourcer meets all the basic KPIs, this does not always mean its work is truly efficient. It can be compared to Maslow's pyramid: quality, timeliness and security are at the base, and above them come additional advantages such as a personal approach, a drive for improvement and so on. If an outsourcer does not deliver the basics, it is simply unfit for the job, and there is no point thinking about its efficiency.
Leading outsourcing companies work to international standards that describe the requirements for a quality management system (QMS). This largely confirms a commitment to efficiency, because a QMS requires specific performance indicators for all processes.
If you are interested not in formal reports with ratings but in real process improvement, this checklist will help you evaluate an outsourcing company.
Your outsourcer is most likely efficient if it:
In many companies HR processes are tangled and only one or two people know how everything works. Outsourcing companies design clear procedures and make sure the work does not depend on a particular person. This approach not only simplifies internal processes but also helps you understand and control the outsourcer's work better.
That is, it does not just perform its direct duties but also notices details, is able to spot errors even in related processes and offers best practices adapted to your industry and company size. An effective provider is also ready to offer optimal solutions not only for current tasks but for future changes, for example when you open new branches.
You are unlikely to find a provider that makes no mistakes at all, so it is more important to look at progress. If there were 5% errors this month and the goal is to reduce them, the outsourcer can propose ways to change the processes - for example, introduce automation or redistribute the workload. A good sign is when every specialist at the outsourcing company strives for continuous improvement, analyses mistakes and suggests changes.
In the course of continuous improvement it is important not to modernise processes just for the sake of it. Sometimes it is more sensible to keep current procedures if the proposed improvements require significant resources while the possible errors carry low risk or minor consequences. Decisions should be based on a balanced assessment of all factors to make sure the improvements really increase process efficiency.
Efficiency can be measured, among other things, by the optimisation of routine processes and the reduction of manual work. For example, if a large international company still issues paper payslips and the provider has not proposed automating this process, that is extremely inefficient.
In an ideal situation the provider has its own IT team and technical support specialists who implement accounting systems, HR EDF, employee self-service portals and so on. If there are no such specialists, a competent provider will recommend trusted partners. But in any case it should strive to optimise processes and push for automation.
The main thing is to define clearly what matters for your company and to keep improving processes in partnership with the outsourcer. And if you have questions about your partner's work, it is important to raise them straight away. Do not be afraid to revisit processes in line with changing requirements and market conditions. Ultimately, the drive for efficiency must be supported by constant dialogue with your outsourcer and a readiness for joint improvement.
Our cases
