6 Benefits of Outsourced HR
Outsourced HR provides many benefits to SME businesses and it’s proven to be a cost-effective solution for those businesses who don’t require a full time HR Manager. Outsourced HR can stand alone or compliment the HR function in an employer’s business. Whether you’re a small or large employer, if you have employees then you have a duty to ensure you comply with employment law. Unsurprisingly, many of you are not fully aware of your obligations in this area.
Employment law is complex and in the main perceived by employers as giving employees rights that restrict business efficiency. We have had many conversations with employers who want to dismiss an employee because they have failed to perform to the standard expected, don’t turn up for work, have high levels of absence, have a bad attitude and the list goes on. Commercially it makes sense for employers to have an expert in HR especially with employment tribunal claims being so high, currently increased by 130%. The risk of a potential employment tribunal claim from a disgruntled employee is worth the investment in HR.
The key here is to manage employees effectively, which will save time and money in the long run, therefore reducing the occasions where employers just want to ‘sack’ that employee because they’ve had enough. Managed correctly, employees can be a valuable asset to an employer and should be invested in and not viewed as a direct cost to the business.
Whether you have an HR function in place or not there are benefits of outsourcing your HR, these are:
1. Reduced Costs
Employers could be forgiven for believing that outsourced HR will be expensive, remember, you get what you pay for! The average salary of a HR Manager is £31k. You can be certain that you won’t be paying this amount for outsourced HR.
Other associated employee costs that outsourced HR won’t cost you include holiday pay, sick pay, national insurance & pension costs.
Additionally, there is the added bonus of not having to spend valuable time managing employee issues such as time off, absence and dealing with performance issues.
2. Increased Efficiency
Time efficiency, this allows you to free up key employees such as your own HR or line managers so they can focus on other aspects of the business. An outsourced HR consultant can manage timely HR issues such as investigations, auditing HR documentation for legal compliance and good practice and HR project management, whilst at the same time being able to identify working practices within your business that are inefficient. Further the HR Consultant will be able to determine if your HR systems are fit for purpose and suggest better more suited software.
Outsourcing your HR allows managers to focus on business strategy and drive the business forward. Savvy business owners take that a step further and incorporate HR into the business strategy having identified its worth and not viewing it as a direct cost.
3. Independent & Objective Case Management
An external HR Consultant knows the importance of HR processes and procedures and the associated employment legislation and Code of Practices. An outsourced HR service will provide a confident and experienced HR professional to represent an employer’s business and their work provide will form a strong defence if ever needed to be relied upon. The benefit to employers is increased confidence that processes have been completed fairly and objectively and as such they are more likely to be deemed to have acted reasonably in the circumstances.
4. Qualifications, Skills & Experience -Wider Exposure to HR Issues
A true HR Consultant will have experience and exposure within a wide range of industries and HR issues. Trying to keep up with employment legislative changes and understand how to implement them into your business policies and working practices takes time, an experienced HR Consultant will manage this for you in a fraction of the time.
The nature of an employers business may determine the skill set required of the outsourced HR Consultancy service, for example; security, care and cleaning businesses have higher levels of service provision changes that fall under TUPE legislation.
Your strength is knowing when to outsource; HR experts know the most cost & time effective way in which to manage HR issues that employers are faced with. Ask yourself if the person that has been assigned the task of dealing with HR in your business is able to incorporate best practice, understand employment legislation and deliver a HR solution that is commercially focused.
5. Additional Support & Reassurance
It’s reassuring to know that you can contact your outsourced HR Consultant to double check what you are about to do.
HR managers also need a source to check they are correct in what they are about to do, and this is another benefit of outsourced HR. You get to choose what you want to outsource; it may just be employment document management or only HR advice or just HR cover for holidays.
6. What should you be considering with an outsourced HR service?
When sourcing a HR Consultancy business, employers should consider their requirements, including:
- the degree of HR support likely to be required
- how much time will be needed each month
- how complex the HR issues are likely to be
- the need for on-site visits
- what key managers can access the outsourced HR service
- and the availability of the HR Consultant
Outsourced HR – all the benefits of an HR expert at a fraction of the cost of employing a HR Manager!
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