What do SMEs need to consider when outsourcing HR? We wanted to lay out all the information leaders need to know when making their decision.
Workers today want to work in roles that offer chances to grow and learn new skills, and in places with a positive workplace culture and loyalty to employees. With these factors becoming staples in people’s job selection criteria, the role of Human Resources has never been more critical to a business’s future.
For larger enterprises this is just par for the course, but smaller sized organizations can struggle to keep up. It’s not just enough to have a human resources person on the payroll, there are programs and training that need to be done to ensure your HR function is comprehensive. For many SME’s, they’d much rather spend those resources on their core offering, to deliver more to their customers.
When you have an employee managing HR on a part time basis, the tasks pile up quickly, and without strenuous attention to schedules it can suddenly become a full time workload. Furtehrmore, with an employee juggling multiple things at once including HR, compliance issues are bound to arise, which can lead to fines, animosity in the workplace, and turnover. All this might lead a small business owner to start looking for help elsewhere.
Outsourcing is not new, and outsourcing administrative functions, like Human Resources, Bookkeeping, and Recruitment, is widely done by small and medium-sized business owners who know their skills and time are better used delivering what they’re good at to their clients, rather than doing the administrative jobs. With pricing models like our value based plans, the cost to outsource can be less than doing the tasks in house, and let’s you invest more in your product. We’re not here to tell you why you should chose BSG (We have a whole page about that), rather, in this blog we want to highlight why outsourcing might be the right call for your SME. We spoke to our HR experts to get the facts on outsourcing HR and how it helps.
Why Do You Want to Outsource Human Resources
When it’s time to consider outsourcing options, think about where you want your business to go with this partnership, what your current pain points is, and what you hope to achieve with outsourcing. This includes how much control of the function you want, and how much you want the consultants to be involved. Here are some considerations for outsourcing HR.
Cost Reduction
SMEs often face budget constraints when trying to grow and maintain in house administrative roles, like HR and Bookkeeping. Outsourcing can reduce the cost of administrative functions, both in terms of direct financial input and indirect things like time savings, reduced turnover, and improved morale.
Access To Expertise
If you started your retrofitting business because you were good at retrofitting, you’re probably not an expert on performance reviews, nor are you interested in taking the time to become an expert on performance and compensation reviews. Outsourcing provides the benefit of having experts on your bench, who can ensure your HR practice is handled directly and professionally, avoiding compliance issues and fines.
Focus on The Core Business Functions
We just touched on it, but it bears repeating: you didn’t open a business to be an HR manager (unless your business is HR). It’s not just a title you can slap on a desk, HR is time consuming. If it’s getting out of hand, outsourcing might be the best way to catch up on what needs to be done, whilst also being able to return focus to what you love to do, with more resources, both financial and intangible, available to do so.
What Do You Want to Do With Outsourced Human Resources?
The next thing to consider is what you want to get out of outsourcing your Human Resources. Consider your company goals, and your personal goals as well. Perhaps your company wants to grow, maybe you want to change the offering to new employees, or encourage more learning within the organization. Maybe you want to be more available for your team, maybe you want a more holistic approach to workplaces, these are all good things to consider.
Read: The Benefits of Goal Setting In SMEs
Here’s how outsourcing can help certain business functions.
Scalability
Whether you want to expand to new markets or realign yourself within the market you’re in, HR experts can help you navigate these organizational adjustments with individuals and teams in mind, plus, most plans are easily adjustable as your HR needs evolve, at least we know our plans are. With all your HR tasks covered, you can use your expert knowledge and experience in your industry to scale in a way that puts your offering at the forefront.
Career Development
You probably want to see your employees succeed, who doesn’t! But encouraging development is different than supporting it. Outsourcing HR can provide access to experts who know the ins and outs of development programs and how to make them work for employees and employers respectively.
Compliance And Risk Management
Maybe you just want the bare bones of an HR department, ensuring that your workplace is compling with labour laws and workplace requirements. These are very crucial functions in an HR department, and they’re in place to make sure nobody is taken advantage of in the workplace, or mistreated by coworkers. There are HR experts that are focused on compliance who can reduce risk for you.
Talent Pool
Maybe you want to have the best of the best talent possible in your organization. This is going to require a conceited effort by your HR team to make sure your organization is a great place to work, through good benefits and a positive workplace culture that promotes learning and inclusivity.
What You’re Willing to Outsource
Finally, when it comes to deciding to outsource, managers have to consider what they’re willing to share with outside organizations, and how much of an involvement they want these organizations to have. While there are always confidentiality clauses at play, the challenge is the ability to delegate tasks.
There are lots of outsourcing options out there, from consulting to ad-hoc support, to letting an organization run it with a semblance of autonomy. Some plans offer a mixture of both to let you decide your level of involvement at what cost, like Business Sherpa Group, and others will leave you with instructions and action items to manage on your own.
Some other things to consider when outsourcing are:
Employee Self-Service Solutions
If you want your employees to have direct access to HR tools, HR outsourcing providers often have access to advanced HR technology, software, and resources that may not be financially feasible for small organizations to invest in on their own. These include employee self-service platforms and software solutions that streamline HR processes. These tools enable employees to access and update their information, submit time-off requests, and retrieve documents, reducing administrative burdens on HR staff.
Confidentiality and Objectivity
Outsourcing HR can provide an added layer of confidentiality and objectivity in handling sensitive employee issues, such as disputes, disciplinary actions, or terminations. External HR professionals can provide unbiased guidance and maintain strict confidentiality.
Autonomy Of Experts
While you might not be an expert in the HR field, you’ll likely want to know what is going on in your businesses HR function. Be careful when looking at outsourcing options so you can select a level of involvement that satisfies your needs and the partners involved.
As a final bit of advice, think about what you can afford, and how you will get to the point you want to be in the market with outsourced help. Do not hesitate to ask your options any questions you have, after all, you’re the one making the decision.
A Final Word on Outsourcing HR
Human Resources is a very integral part of an organizations success story, so getting it right is paramount, and time consuming. That’s why there are so many options for organizations looking to outsource HR, to let everyone get the right mix to help them thrive.
We suggest learning what different organizations can do for you, in terms of support level and skillset, and then what you want to do with the support of HR experts before you make a final decision. Never forget that simply talking to experts is not a wase of anyone’s time and that you can always come back to ask more.
