Outsourcing your HR function can give you access to skills, knowledge and support, and save you costs in the medium and long turn.
Most small and medium business owners know the frustration of spending more time than they want on non-revenue generating activities. From payroll and human resource management to benefits and compensation, managers and directors can spend a significant proportion of their day engaged in these important and time-consuming activities.
Some businesses might have decided to appoint the ‘HR Task’ to an individual manager, as part of their other duties… This is usually a massive mistake, as they have a conflict of interests, are usually an ‘accidental HR manager’ and invariably after appointment don’t perform well in any of their given roles. This is both costly for the business and invariably not good for the business or its people structures.
The answer for many businesses is to outsource their HR functions to third party providers so that they can focus on their core business.
· Generally speaking, the top three reasons for outsourcing HR are:
· Access to specialist skills and knowledge
· Gaining better quality support than the business is able to be offer in-house
· Some quite large cost savings
· In more complex people-based situations, a third-party provider gives complete impartiality.
· Adherence to HR based compliance and the latest regulation.
Some of the biggest savings comes from the company either not requiring a fully accredited HR person in-house. The second major win in this situation is with compliance and training, as an outsourced provider will always be at the top of their game, have an eye on any legislative changes and conduct regular audits of both your processes and theirs. In turn this lets you and your team run your business and work on revenue generation.
But when does it make sense for you to outsource? In assessing whether you should or not, there are several questions to consider:
How big is your company?
What is the level and type of cover you require to support and maintain your teams? Also, will you want your provider to help with corporate (HR based) communication to help with engagement and maintaining motivation and wellbeing.
What services do you need?
The work undertaken by an outsourced HR consultant varies hugely dependent on the nature of the business and the talents of the employees within the organisation. So, you’ll need to decide on the level of service that your business requires.
How much does an outsourced service cost?
Again, this depends on what level of service you require, the number of team members you need to support, and initially the current state of the HR processes and practices within the business. However, it’s important to remember that having outsourced your HR and carried out the standard HR audit, your business insurance normally gets cheaper!
What type of provider do you want?
Do you want a simple support line service, or do you want a face to face individual relationship, with the provider spending a good amount of the week within your offices… Again, the options for this are endless.
On top of this, you’ll also need to decide on any business liability insurance, restrictive covenant insurance and a whole host of other services that are available to protect you. Whilst smaller companies only normally need a basic cover level, it’s important to know that your provider will be able to grow with you.
Whilst bigger organisations will normally have a great deal of the things I have mentioned in place, a great many SME’s and smaller businesses don’t! However, its increasingly important that you do, as starting earlier makes the process of managing your businesses HR requirements and compliance a great deal easier as you expand. Having all of the above in place is also a major benefit should you decide to sell your business at any point, as the buyers will know you are fully people compliant.
If you think you’d like to know more about the Outsourced HR services we can provide, why not drop us a message or give us a call?
Member since: 2nd June 2020
Regardless of the size of your organisation, there can be times when you need external support. Remember: if you think you might need support, it costs nothing to talk!