HR outsourcing: Get your small business the best staff

Great people make great businesses. But it can be hard for small businesses to find them. That’s where HR outsourcing comes in

Some people think HR outsourcing for small businesses means posting a job on LinkedIn. But did you know that payroll is actually the most popular HR need for small businesses?

As you are probably aware, HR (Human Resources) is the part of an organisation that focuses on the staff. It covers everything from sourcing and hiring new members, to providing your current employees with the training and assistance they need to perform their job as well as possible.

HR takes good care of your staff, so your staff take the best care of your business

Larger companies often have entire departments devoted to this important function. But for smaller businesses and start-ups, it can be tough finding the time and know-how required to hire the best recruits – let alone keeping them motivated to stay long-term.

That’s where HR Outsourcing (HRO) comes in. HR outsourcing is a way of sub-contracting your HR tasks to a third-party expert. There are a host of agencies who specialise in HR, and below we tell you everything you need to know to find the best one for you.

In this article you will learn:


Why does my small business need HR Support?

First, let’s look at the numbers. According to Deloitte’s study of HR trends today:

  • 80% of executives rated employee experience as important
  • 57% of employees leave a role for better job satisfaction
  • 89% of organizations currently use or are considering HR outsourcing

Often the most successful businesses – Google, Apple, LinkedIn – understand the importance of taking good care of their staff. After all, a happier workforce means a more productive workforce.

Putting people first can be especially tough for small businesses, but it’s no less important. Luckily, HR outsourcing offers an affordable option, and there are a number of HR agencies that offer HR expertise in affordable and flexible packages.

These are the main HR pain points that all businesses tend to face:

hr outsourcing small businesses

1. Admin

Most business owners want to take care of their staff, but no one enjoys the admin involved – organising payroll, managing staff documents, dealing with long-term sickness etc.

With employees also comes legal agreements, which require an in-depth and consistently up-to-date understanding of employment law.

It is a tall order for small business owners to stay on top of all this, but there are budget-friendly ways of leaving it to the experts.

2. Recruitment

Finding and hiring the right people for the job can be one of the hardest tasks for small businesses. There are so many stages: sourcing, shortlisting, interviewing, and selecting candidates – not to mention drawing up employment contracts.

Having recruitment pros working hard on your behalf can help you find the perfect candidate, and do your business a big favour.

3. Health and safety

It’s crucial – both legally and morally – to give your staff a safe working environment, as well as sufficient training to operate any relevant equipment.

Even the most basic elements of health and safety – such as CCTV, alarms and fire escape routes – require a great deal of attention and knowledge, and small businesses can do with a helping hand.

4. Staff retention

Your staff are your most important resource. So it’s worth working hard to keep them working for you.

Businesses with few employees tend to struggle here due to limited time and resources, but HR agencies can provide cost-effective solutions.

5. Staff rewards

Everyone performs well when suitably rewarded. But how do you know what performance metrics to go by? And what should the rewards look like?

Small businesses can benefit from outsourcing this vital task to people in the know.

6. Staff development

A big part of staff retention is the investment you make in your staff. This means providing the training – in-house, online, or via a third party – they need to perform their job optimally. But it also includes engagement initiatives like mentoring, community outreach, and philanthropy.

Staff development is one of the easiest ways of boosting morale and motivation amongst your employees – and happy workers mean better work for your business. As a small business, it can be tough staying on top of all your HR needs. But by outsourcing them, you may be surprised by how much time and money you save.

To get your hands on your very own quotes from the suppliers who best match your needs, don’t forget to fill in the form at the end of the page.


HR checklist – does my small business need HR?

Still not sure whether your small business needs HR support? Just ask yourself these five questions to find out:

  1. Do I have a high rate of staff turnover? – Often this can mean your employees’ needs are not being met. Are you invested in them, and giving them all they need to excel? You might like to consider HR support in their training and development.
  2. How is my filing system? – Are all of your employee files organised properly? Do they contain all of the relevant documents, and do you know what they are? Do you know how they should be stored? If not, outsourcing your HR admin could be a good idea.
  3. Do I have an employee handbook, and do all employees have access to it? – It is crucial to document your main policies and procedures, and ensure your employees are made aware of them. If you would need to create these from scratch, you could do with some legal HR assistance.
  4. Am I recruiting new staff as quickly as I would like to? – You probably know how essential your staff are to the growth of your company. Getting the best candidates on your radar, and bringing them onboard is your first step. By outsourcing this important job, you can stand a better chance of finding the best staff.
  5. Is a performance review process for employees in place? – Regular and structured feedback helps get the best out of your employees and keeps them motivated to perform. HR agencies can help if you are new to employee development.

If you feel that any of these areas require time, money and expertise you may not be able to offer, remember that HR outsourcing is on hand to get these things under control.

Business size – is my company big enough for HR?

In short – yes, your business is always big enough for HR, regardless of size. This is because all companies have at least one human on the inside, and therefore have human resource needs.

Depending on the size of your business, you may prefer to have an internal HR staff member or to outsource your requirements to HR agencies. Industry experts recommend a ratio of 2.7 HR employees for every 100 staff members.

Just use this chart to work out your own HR needs:

No. of staff No. of HR staff needed Outsource or hire?
5 Fewer than 1 HR personnel Outsource
5-10 Fewer than 1 HR personnel Outsource
11-20 Fewer than 1 HR personnel Outsource
21-50 1 HR personnel Outsource
21-100 2-3 HR personnel Outsource or hire
100+ 5-6 HR personnel Outsource or hire

As we explain below, hiring a new HR recruit will often cost vastly more than seeking assistance from HR agencies. HR outsourcing is even a popular option for businesses with over 200 employees since it tends to cut costs and ensure HR expertise.

An internal HR Staff or HR Outsourcing – Which is for me?

One option is hiring an internal member of HR staff, either by promoting from within or through a normal recruitment process. The alternative is outsourcing your HR needs to an HR agency.

For most businesses with fewer than 50 employees, it does not make financial sense to hire internal HR staff.

By comparing the pros and cons of HR outsourcing, you can see why it takes the lead:

The pros

    ✅ Considerably cheaper
    ✅ HR agencies are HR experts
    ✅ You are not liable for any errors
    ✅ Your staff can focus on their jobs
    ✅ HR outsourcing is tailored
The cons

    ❌ Promotions can motivate staff
    ❌ You know what you’re getting
    ❌ Internal staff can get results faster

In summary:

Generally speaking, internal HR staff can offer more control over your HR tasks, since collaboration is easier with people in-house. In addition, opening up new roles can help motivate existing employees hankering for a new opportunity with you.

But this all comes at a huge cost that often simply fails to make commercial sense. HR outsourcing not only saves your business time and money but you also tend to get better HR services due to the agency’s expertise, and there is always an incentive for them keeping their clients happy.

HR is not rocket science, but it is a field with legal implications – and serious consequences if done wrong. Outsourcing your HR needs takes this burden off you, so you can get back to what you know best.


What are the HR Outsourcing costs for small businesses?

Of course, HR outsourcing is not free. But did you know that its main benefit is actually to save small businesses money?

The services provided are necessary for companies of all sizes. But for smaller business, it often makes more financial sense to opt for HR outsourcing.
Here’s why:

What do internal HR staff costs look like?

Taking on a HR manager or executive will not just cost your business their salary, but also the fees involved in their recruitment, training, and potential pension contributions – not to mention the time and money required to implement their own HR initiatives.

According to, the average HR manager’s salary in 2018 is £47,000 – that’s already £3,000 higher than in 2017. In addition to this wage, remember you will also pay for their training, which incorporates the salaries of those that train the new HR manager, as well as any costs of new materials and equipment they may need.

The latest estimates reckon that these requirements cost a business on average an additional 50% of the employee’s salary.

So, you are really looking at an estimate of around: £70,500

And that’s just in the first year.

What about HR Outsourcing costs?

If you think your business only needs occasional support with your payroll, admin or more general advice, it may be excessive to pay for an internal HR manager. This is why HR outsourcing can be a lifesaver for small businesses.

There are two options for outsourcing your HR needs: HR agencies and HR consultants. For more details on costs, visit our dedicated HR outsourcing costs page.

HR agency costs

Of course, the fees will vary depending on the level of service required, but this is how they might compare to a new recruit:

Function Outcome Cost
HR Audit Full review of current HR procedures to provide any quick fixes £400-£500/month
HR Support Provide aid to your business or staff during large projects £100-£200+/month
Outsourced HR Outsource all HR processes, including health and safety, payroll etc. £100-£300+/month

It is worth bearing in mind that a business that has taken the outsourcing route likely will not get separate audits for each of these functions, so these costs do not necessarily build on one another.

HR consultant costs

You could also consider an HR consultant, whose prices will differ depending on the professional or the agency you go for. They will most likely charge a standard rate – this could be an hourly or day rate, or even a project-specific rate.

So, what will an HR consultant cost you? A pay-as-you-go agreement tends to cost anywhere between £40 and £100, but of course will depend on the experience of the consultant and complexity of your tasks.

The key here is to seek transparent pricing – double check there are no hidden costs, and the agreed quote is the total you will pay. You will also want to consider whether this is a one-off issue you need help with, or whether you would prefer ongoing assistance. If the latter, it is worth trying to negotiate lower rates – often around £5-£10 less per hour.

Below is a basic comparison of HR consultant fees, comparing both pay-as-you-go and retained consultant costs.

Consultancy type Price per hour Hours Total
Pay as you go £75 1 (quick fix) £75
Pay as you go £75 8 (day) £600
Retained £60 1 (quick fix) £60
Retained £60 8 (day) £480

Of course, these figures might not exactly reflect ones you may have seen, but will give you an idea of what you can expect.

If they look pricey to you, outsourcing your HR needs to an agency is probably your best option. You can fill in the form when you get to the end of the page, and start getting quotes right away.


The 5 best HR agencies for small companies today

Perhaps you have already had your mind boggled by the vast selection of HR agencies available. Or maybe you are not quite sure where to start.

Whatever stage you are at, here is what you need to know. We’ve scoured the HR landscape for you, and have tracked down the five top providers of HR outsourcing for small businesses and start-ups in the UK today.

Here they are:

HR Agency Great if you need: Great if you want:
Avensure Employment law, health and safety, general HR Tailored yet uncomplicated HR support
citrusHR Diverse HR packages Budget-friendly HR solutions
JumpstartHR Strategic or project-based HR consulting Specialised or one-off HR consultancy
Moorepay Payroll, general HR Hassle-free admin support
William B Rose Employment law and general HR No-nonsense HR with transparent pricing

Just remember, the best way to find out exactly what these companies could do for your small business is to speak to them directly. To speak to HR companies, simply fill in the quick form at the top of this page, and we’ll get you quotes from the agencies that best suit your needs.

Avensure – For straightforward HR

Avensure HR Firm Logo Employment law, health and safety, general HR
Customer experience ★★★★★
Services offered ★★★★★
Value for money ★★★★

Avensure is the go-to HR agency for small businesses in need of legal counsel. They specialise in employment law and health and safety but are also trusted advisors in a wide range of fields.

Its employment law package will equip you with everything you need to understand the law, and how it affects small businesses. You will receive contracts, handbooks and policies tailored just for you, and Avensure even offers employment tribunal cover and representation.

Avensure’s health and safety support includes site evaluation and action plans, as well as all relevant training. And if you still have questions, Avensure also provide one-to-one support and advice whenever you need it.

citrusHR – For budget-friendly HR

citrushr firm logo Great value and diverse HR packages
Customer experience ★★★★★
Services offered ★★★★★
Value for money ★★★★★

citrusHR support small businesses and charities with a number of HR needs, and is best known for delivering excellent value for money.

Citrus offers tailored packages that cover all the main HR pain points – from payroll and health and safety, to employee rewards and recruitment.

Not only will you receive custom-made handbooks and employment contracts, but you will gain access to citrusHR’s HR software, specifically designed with small businesses in mind.

Plus, Citrus customer service is second to none. citrusHR will match you with your very own personal HR consultant, so you can have a human conversation about your own human resources.

Jumpstart HR – For custom-fit HR

Jumpstart HR Firm Logo Strategic or project-based HR consulting
Customer experience ★★★★★
Services offered ★★★★★
Value for money ★★★★

JumpstartHR has a reputation equal to the other leading HR agencies on this page. But stand out for one key reason: they offer support on an hourly basis.

This makes it perfect for small businesses seeking step-by-step HR assistance, rather than ongoing support. JumpstartHR have crafted one of the most personalised and flexible services – that means they can be scaled to your current demands.

JumpstartHR is expert in business strategy, and can provide quality counsel on your specific projects. But given their expertise in a number of HR fields, they can also deliver more general HR advice.

As you would expect with a top HR agency, JumpstartHR has an on-call service, gaining it top marks for customer service. So, if you require more finely tuned help within a limited timeframe, this is the HR agency for you.

Moorepay – For hassle-free admin support

moorepay payroll logo

Payroll, general HR
Customer experience ★★★★★
Services offered ★★★★★
Value for money ★★★★

Moorepay specialise in providing quality payroll and general HR services to businesses big and small.

As a small business owner, you don’t have time to become an expert in the ins and outs of taxes, benefits, and legislation. All you need is a helpful and reliable HR agency like Moorepay.

Moorepay is a leader in financial and administrative HR, and offers personalised services. It works alongside various high street banks – meaning you can be safe in the knowledge that your payroll is in the best of hands.

In addition to payroll support, Moorepay also offers more general HR services as and when you need them. These include health and safety, time and attendance recording, benefits – and more.

William B Rose – For transparent HR

William B Rose HR Firm Logo General HR, employment law
Customer experience ★★★★
Services offered ★★★★★
Value for money ★★★★★

William B Rose offer a host of premium fixed-fee employment law and HR services to small businesses in the UK.

This supplier understands that not everyone wants to pay top dollar for their HR needs – that’s why the pricing is completely transparent. The agency lists their HR services in no-nonsense packages, so you know exactly what you are getting, and for how much.

William B Rose specialise in employment law – including tribunal representation, general advice, and mediation – and even have their own in-house employment lawyers at your service.

In addition, you can expect more general HR support, available as always in fixed-fee packages, and custom-fit your needs.


Break it down for me

To summarise, one useful way to help you decide whether to invest in the services of an HR firm for your small business, is to consider whether you could do with some help in any of the six key areas of HR:

  1. Admin
  2. Recruitment
  3. Staff retention
  4. Staff rewards
  5. Staff development
  6. Health and safety

Many small business owners and employees start taking on HR tasks like recruitment, training, and payroll, whilst their own responsibilities suffer.

This is where you need to ask yourself whether the DIY option is a good investment of your time and money, or whether a third party expert could save you both – and deliver better work.

So if your staff are struggling to stay on top of all your HR needs, or if there are some areas you think you could do better, but are unsure where to start, HR outsourcing will be a great option for you.

Compare HR outsourcing costs?

Do you need help with a specific issue? Or perhaps you are simply on the lookout for more general HR support? Whatever your goals, some quotes would probably come in handy now.

We’ve made this step easier than ever. To talk directly with the HR agencies who best tick your boxes, just select an option below.

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