Do you know that your Human resources department can focus on revenue generating activities rather than focus on transactional HR & Administrative functions that can slow down your company’s productivity?
I would say that as a general rule of thumb, when HR & Administrative processes begin slowing down the productivity of your firm, is the time to consider outsourcing the management of your human resources. Good employee relations are not simply “nice to have” but important to get right as they can directly affect the future revenues of your business.
Human resources outsourcing makes sense as a way for smaller companies to transform and get expertise without hiring in additional personnel at high salaries and keep in-house modest and focused on employees. For larger companies, compliance can be a huge risk as can legal liability, so outsourcing grants extra layers of protection. And if you do business with the government, compliance issues can turn into lawsuits, fines and penalties in a heartbeat – and no one wants that!
Most small to medium sized 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 necessary but time consuming tasks.
The answer for many businesses may be to outsource part or all of their HR & Administrative functions to third party providers so that they can focus on their core business.
Generally speaking, the top three reasons cited for outsourcing HR are access to skills and knowledge, gaining better quality support than the business is able to be offer in-house and the costs saved. This saving comes from the company either not requiring an HR person in-house, or enabling the person who had taken on the HR function to focus on revenue generating work.
But when does it make sense for you to outsource? In assessing whether you should or not, there are several questions to consider before you make a decision.
- Is my HR & administrative functions slowing down productivity?
- Do I want my HR & Admin to operate as a COST center or REVENUE center?
- What services do I need to outsource?
- How much does an outsourced service cost?
- What type of outsourcing provider do I want?
- How do I determine how much I would save when I outsource?