In our previous blog, ‘’Outsourced HR, what is it and can it be achieved effectively?’’ we touched on why you should consider outsourcing your HR and the steps you can take to partner with a HR consultancy that is right for you and the needs of your business!
Building upon this, we will outline the top 3 benefits that your company can obtain by outsourcing HR functions. The benefits of outsourcing present a real opportunity to achieve a return on investment for businesses, with research showing that firms who outsource their HR grow between 7-9% faster than those who choose to keep HR in-house. Although outsourcing HR may not be right for every business, it’s worthwhile to consider its benefits and whether outsourcing may provide some value for your own setup.
1. Gain access to expert skills and knowledge
Too often business leaders are faced with people management challenges that leave them feeling out of their depth or searching for a solution, most commonly these issues are people related and time bound. Having access to with a wide range of knowledge on human resources, best practice and case law, ensures that any issues which may arise are dealt with swiftly and in a manner that will protect you and your organisation.
Being able to recognise that you cannot and should not have to master every aspect of modern-day business is crucial. Outsourcing elements of your business’ processes, such as HR will allow you to focus on core business activities and will benefit your business long-term.
2. Increase efficiency and confidentiality within your organisation
For small and medium businesses, where resources can be more limited, dealing with HR issues can cause huge challenges. Especially when you consider that HR resolutions can be bureaucratic and often include a long and drawn-out process. However, when your HR issues are outsourced to another company this removes the onus of stress, hassle, and disruption away from your business into the hands of experts.
81% of small business owners do their own HR, with more than 30% saying that they do not know what they are doing in terms of HR. As a business leader, often time is not a commodity you have to spare, getting bogged down in HR minutiae, such as contract disputes and administrative issues, is often something that is better moved to those with the time and knowledge to give it the greatest focus. Moreover, in smaller organisations it can be difficult to maintain personal distance from your fellow employees, outsourcing can reduce complications. From a confidentiality standpoint, outsourcing can be especially beneficial for employees that are dealing with personal issues which they may not want to raise to someone in their general vicinity. Outsourced HR can provide employees with a platform to speak about issues and seek support in a quiet, confidential manner rather than potentially causing further disturbance.
3. Save on financial cost while reducing staff turnover
Given the serious nature of HR issues, when challenges arise, the risk of a real financial headache can be a serious threat depending on the complexity of the HR issue. Thanks to outsourcing these risks can be vastly negated. According to research, 50% of firms felt that they had reached cost saving objectives whilst simultaneously noticing improvements in labour productivity.
Although your business will be paying to outsource their HR to another company, it is statistically seen as a more financially viable option compared to that of hiring a HR employee with a yearly salary. Employee turnover is 10-14% lower in companies that outsource their HR compared to those that keep HR inhouse, highlighting the effectiveness in keeping employees motivated and avoiding the loss of investment when letting an employee go and hiring another in their place.
Factors to consider before outsourcing your HR
The decision to outsource HR does not come without its challenges which should be considered before undertaking this key business decision. As a business leader, outsourcing HR may feel like you are giving up control of a key area and handing over responsibility to a third party, this can be difficult for small business owners who are used to being in control of every aspect of their business
In our previous blog, ‘Top 5 tips when outsourcing your HR’ we discussed the importance of ensuring a flexible contract between your business and your potential HR supplier, having fixed review periods to ensure accountability in the partnership. Therefore, to combat the feeling that you are losing control of your business, it is vital that your contract ensures you have the final say over recommendations provided by the HR vendor.
It may feel to some that outsourcing HR removes the personal or caring aspect of the management, that leaders are not interested in the challenges faced by their team effecting the personal connection. This is very much not the case, in fact it allows leaders to focus more on the personal relationship by removing the regulative / legislative admin allowing the necessary but seemingly difficult conversations around holiday entitlements, contracts etc to be dealt with impartially. When selecting your HR partner it is crucial that they understand your workplace culture and approach to to your team continuing to foster posititivity whilst protecting the businesses interests.
Overall, outsourcing HR provides some real benefits which can make your business thrive, allow you to focus on business that really matters whilst not having to worry about HR inconveniences that may be holding you back. Are you interested in taking your business to the next level? Contact us today for a discussion on how we can handle your HR and help maximise your true potential in your respective industry!