How outsourcing HR can improve the profitability of your business
MARCH 26, 2013
By Bruce Ramshaw
With your team focussed on the delivery of the Company’s core products and services to customers, most small business owners find HR related issues an unwelcome distraction to their objective of growing the business profitably.
More often than not, HR issues are time-consuming and complex and if handling wrongly can have serious implications on the success of the company. With this in mind, there is general acceptance that these issues cannot be ignored, coupled with a growing frustration that employment law is complex and ever changing and requires increasingly more resources and time to manage.
This is true. Employment contracts and handbook policies need to be legally compliant and regularly updated to ensure that procedures surrounding disciplinary, sickness and performance are handled correctly and does not risk a costly employment tribunal claim.
This is why increasing numbers of small business owners are making the commercial decision to outsource part or all of their HR services to an HR Consultancy. The benefits include:
1. Back to basics – Your management team can re-focus on growing and developing your core business without being distracted by numerous HR related matters.
2. Peace of mind – You have a professional HR service provider and confidante who can advise and deal with all matters relating to HR to ensure that you remain legally compliant and minimise the risk of an expensive tribunal claim against the Company.
3. Commercial – The cost savings in outsourcing HR can be significant in terms of saving management time, reducing the risk of costly employee disputes and increasing levels of engagement and productivity within your team. In addition, you are only paying for the service when it is needed, so are not adding any more costly heads to the monthly payroll.
4. Attraction and Retention – Over time, one would expect levels of sickness absence and staff turnover to fall and levels of teamwork and staff engagement to rise. These indicators have a direct impact on productivity and performance and will save considerable time and expense on recruitment fees and hiring agency temps to cover periods of absence.
What to Look for in an HR Provider
Writing a list of all your HR requirements is a good starting point, as this will form the basis of your initial discussions with your potential provider and will quickly indicate whether or not they are able to meet and exceed your requirements within budget.
It will also give you the opportunity to see if you could effectively work with them and whether they fit the culture of your Company. After all, this relationship will impact on your most valuable resource – your people – so critical that this is the right fit. You may also want to ask for references from other clients that your HR provider has serviced or suggest a trial period to ensure that the service delivery remains on track and within budget.
Getting this right with ensure that you can focus your efforts on driving your business forward with the peace of mind that you have invested wisely in this critical and very necessary business service.