As people lose their jobs, same way businesses shutdown daily due to financial factors such as high running cost. Outsourcing some sort of functions of the company has become more popular way of reducing business overheads. Some would argue that its more expensive if you are a small to medium sized company to outsource certain functions such as the IT department or logistics.
Businesses can almost outsource anything which isn't strategic to its core of it's business. Most companies now outsource their Accounting and IT department. No doubts you can cut your overhead cost by outsourcing but would it be cheaper to outsource the HR department? After all, you may be able to do with just a single personnel handling the HR side and also double as your administrator. One can really suggest that if its a small company, you can get by recruiting just one person dealing with the HR side of the business.
Businesses can almost outsource anything which isn't strategic to its core of it's business. Most companies now outsource their Accounting and IT department. No doubts you can cut your overhead cost by outsourcing but would it be cheaper to outsource the HR department? After all, you may be able to do with just a single personnel handling the HR side and also double as your administrator. One can really suggest that if its a small company, you can get by recruiting just one person dealing with the HR side of the business.
Reasons Why You Should Outsource Your HR Function.
Save on Salary
Let’s start with the obvious one. Outsourcing your HR simply
means you are paying someone to take on the responsibility of that business
function for you. For a large company, it may be a big savings on salary but it
may also be savings for a small business as well. Most outsourcing companies
offer packages that adjust fees in relation to number of employees.
With outsourcing, businesses could save a large percentage
of cost that could have gone on wages, holiday, bonuses and pension. This is
one of the main reasons why outsourcing is becoming more popular in the
business world today.
Businesses do not save only on wages and other cost like
holiday, pension, there is also the savings on training cost associated to new
entrants. There is the learning phase for new employees which can be accounted
for. This is saved when the department is outsourced.
Outsourcing HR duties often increases efficiency
Some firms who have outsourced their HR function, as part of
the HR services outsourced - is the hiring and training duties. This allows the
business to focus on its core functions, not losing energy and time on
screening of prospective employees or conducting interviews.
Recruitment can be expensive if you put a cost on efforts on
getting the right candidate for your post. The hiring cost to some businesses is
not why they have outsourced that side of the HR; they will rather use their
time resource on other areas of their business.
The resources saved on hiring and training can be used on
other areas of the business which often leads to efficiency. Business can focus
more on other strategic area of the business such as business opportunities and
threats, profits and any business change needed for company growth.
Outsource Your HR Functions and Avoid Employment Tribunal
Let me get this out first, outsourcing your HR will not
guarantee that your employee will not take you to the employment tribunal. If
you do end up at an employment tribunal, it may not reduce your legal fees.
There are no guarantees when it comes to employee discontent. However, you do
not want to be at the wrong side of the law. Those who have been on that end
have paid heavy cost for non compliance.
Many claimants have won their employment tribunal claims
simply because the employment laws have not been followed. You may think you
have recruited one of the finest graduate in human resources but when it comes
to employment tribunal, firms not only need those who know the law, they also
need experience and experts in dealing with employee – employer relationship.
An employment tribunal case that comes to mind is the Ramphal v the Department for Transport (DfT).
This case is a very good example that even an experienced HR manager, could
also get it wrong. The case tells how the HR should be involved in disciplinary
proceedings in a workplace. It shows how easily HR can also get it wrong.
It is vital that businesses get this right. You may think
you are saving by having a single member of staff has the HR officer and
manager but you could lose thousands in an employment tribunal claims for
various reasons not limited to unfair dismissal, constructive dismissal,
redundancy, discrimination claims. Employee can take you to court even on
holiday pay calculations or failing to make reasonable adjustments.
Most often, you pay not just the legal fees and the
employment awarded cost, it could also lead to subsequent claims from other
employees. There is no price for the emotional stress of having to attend an
employment tribunal hearing.
Finally, most business operates to make profits for its
shareholders and the decision to outsource any resources lies in their hands.
Even when you have decided to outsource your HR duties, you need to get it
right. Do your findings to make sure you are in good hands. Do not outsource
just because it’s cheaper than the next one. Don’t pay the price you tried to
save in the first place.
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