Nine Benefits of Outsourcing HR
Many companies sub-contract some of their activities to specialist providers and HR, being a non-profit area, tends to be one of the obvious candidates for outsourcing.
There are many elements of HR that suit outsourcing – business processes (payroll, recruitment, maybe the whole HR function), application service outsourcing where external providers look after the HR software, a company restructure, learning and development programmes, to name but a few.
But what are the benefits of outsourcing? Let’s take a look…
- Cost saving:
- Spending less on salaries – Depending on the size of the HR department, an SME can easily spend hundreds of thousands of pounds on HR staff
- Avoiding penalties from noncompliance – with employment laws and regulations
- Spending less time on HR functions – this frees up time to spend on strategic sales and growth goals, thus increasing revenue
- Speed and efficiency: A ready made outsourced team will be able to hit the ground running quicker than building an In-house team and with the associated time it takes to onboard , train and develop
- A tailored approach: Sometimes you may just need basic HR advice but at other times you might need more strategic input – or training, or coaching – when you have an internal team you often can’t afford to buy all those disciplines of expertise. By outsourcing, you get the benefit of that expertise (and more) but you don’t have to pay for it until you need it
- Flexibility: Growth phases within companies can be somewhat unpredictable – how quickly you’ll grow, which areas to grow and where you’ll need to allocate recourse can and will change frequently, requiring maximum flexibility.
- Specialisms: Smaller companies in particular may employ an HR generalist, who will cover all employee-related matters, from the administration of policies and procedures to recruitment and learning programmes. However, there are areas of HR specialism (eg recruitment; employee relations; benefits and compensation; data analyst; employee engagement) which are key to helping a company remain competitive. Outsourcing gives you access to these HR specialists when you need them. For example, establishing employee health and well-being benefits can take up a lot of time but an outsourced team can manage the whole process from design to implementation
- Startups: As soon as a startup makes their first hire, they’re faced with new risks and must ensure they’re in compliance with all government regulations – an outsourced HR consultant will help mitigate these risks and ensure compliance.
- Focus: Outsourcing HR allows business leaders to focus on what they want to do – build their company. Projects such as a company re-structure, introducing a new compensation and benefits package, employee engagement and culture surveys can all be undertaken by an outsourced HR company.
- Recruitment: Employing the right people is vital to any company and recruiting is a skill. By understanding your business and culture, outsourcing recruitment will help –writing the job advert that attracts the sort of person you want, avoiding unconscious bias, using competency based interviewing techniques and the right psychometric tools, their specialist knowledge will speed up the whole process, find you the right fit into your team and increase staff retention rates.
- Grievances and Disciplinaries: Apart from the stress involved in handling these, handling grievances and disciplinaries in-house always runs the risk of being accused of unfairness. An outsourced consultant will ensure that the necessary investigations are undertaken thoroughly and fairly, resulting in a just and unbiased conclusion.
Having been in the business for almost 21 years (we come of age in July this year!), we’ve worked with many companies offering different levels of outsourcing. When it comes to HR outsourcing, one size does NOT fit all, which is why we offer a totally tailored and flexible service.
One final but important point – remember, HR outsourcing does not absolve the company of good people management practices!
If you’d like to talk more about how outsourcing HR could help you, get in touch!