(Newswire.net — November 9, 2016) — A company’s human resources department is responsible for a huge scope of functions, from filing to employee payrolls, and from recruitment to benefits. These functions could be carried out by an in-house team of employees, or alternatively deferred to an external source. Here are some of the questions to ask when considering outsourcing your HR:
Efficiency
If your company comprises fewer than 50 people then there probably isn’t any need for an external HR team, since the administration/HR team of the SME will be more than capable of handling HR itself. This may be through a secretary, or perhaps a manager with experience of people issues. In a small business everyone will know each other’s names and faces, but at some point – usually when people employees are working in different departments, rooms or premises – this might become more difficult, and it may be where external HR is needed.
Here’s a simple rule of thumb; if your HR machine has slowed to a point where efficiency is declining and you are losing money, and the cost of outsourcing is of smaller value than this loss, or if outsourcing would allow the company to expand at a rate that would more than pay for itself, it might be time to outsource. It may be that a few simple tweaks can be made to improve efficiency such as using trusted HR software to keep the service in-house – or alternatively that software might be used by an external HR team to speed things up for you.
Cost
HR expert Nicola Goodridge says, in this Guardian piece, that the cost should be agreed up-front for any outsourcing, and largely depends on the level of service that is needed: “For example, I may be asked to assist on a specific well-defined project in which case I will estimate the cost involved, or at least offer a range of costs within which it will fall. Alternatively, I may work alongside the business dealing with day-to-day issues on a retained basis, or, I may be called in to sort an ‘emergency’ for which I charge an hourly rate.” A business can then assess whether this fits its budget.
Recruitment
Do you really have time to find the best employees for your company? It’s common knowledge that the cost of employing an employee who turns out to be incorrect for the role is prohibitive (according to this US article it could be as much as $840,000 for a middle manager who eventually turns out to be wrong for the role). And while there’s no guarantee that an external agency will find you the correct person, they might at least be able to cast the net wider and filter out those who are wrong. That said, if you have time and a good track record in finding good employees, you might be able to save considerable costs.
Note that retention of talent is also an important skill for companies; unhappy employees with low morale may look elsewhere if they do not feel they are cared for. That might require a very ‘hands-on HR team’, or alternatively one which is barely seen. If employees do feel they have a case for pursuing claims for discrimination or are pursuing redundancy, an external agency might be able to take a less emotional approach in dealing with employees they do not know personally.