HR outsourcing in small and medium-sized enterprises

Abstract

Purpose Small and medium-sized enterprises (SMEs) are increasingly outsourcing human resource (HR) activities to outside labour market intermediaries. In this paper, the focus is on a specific type of labour market intermediary, the HR intermediary (HRI). The purpose of this paper is to describe and discuss SME outsourcing of HR services to membership-based HRIs, and potential problems and benefits that may arise in this process. Design/methodology/approach The empirical foundation comprises case studies of three Swedish HRIs and 12 of their SME clients. The data were collected through semi-structured interviews and a document study. Findings The findings show that social aspects such as trust, shared values, communication and commitment are crucial characteristics of the cooperation between HRIs and SMEs. These social aspects are a result of the owner/membership structure, and a distinguishing feature of the studied HRIs in comparison to other types of labour market intermediaries. Research limitations/implications The results of the study underline the need for increased research related to the intermediary concept and its meanings in different contexts. There is also a need for more empirical research on HRIs, e.g. comparisons between different types of HRIs, and studies of the emergence of virtual intermediaries. Future studies should focus on the role of LMIs and HRIs in regional development processes. Practical implications Companies that interact with HRIs should reflect on the different pros and cons that this cooperation may result in, both in the short term and in the longer term. Originality/value The study provides an enhanced understanding regarding the relations between SMEs and HRIs, based on the two broad types of SMEs (with low/high internal HR skills) and two types of HRIs (with short/long-term orientation).