Human Resources (HR) support numerous facets of your business, including compliance, benefits, compensation, payroll, and overseeing all other areas related to employee relations. HR plays a critical role in the organization and directly impacts your business’s success. For most companies, this function aligns your people strategy with your business goals, ensuring the level of engagement and culture align with these broader objectives. In this article, we'll explore the world of HR outsourcing (HRO) so that you can effectively make informed decisions about the best solution for your organization.
What is HR Outsourcing (HRO)?
Outsourcing is a business arrangement where a company hires an external firm or individual to take responsibility for a specific task, function, or project. Outsourcing typically aims to access external expertise, improve operational efficiency and allow a company to focus on its core competencies. Human Resource Outsourcing involves hiring a third-party provider to manage your HR functions. This approach allows small and medium-sized businesses (SMBs) to mitigate the risk of non-compliance with a scalable, cost-efficient alternative to hiring a full-time person or team.
The Benefits of HRO
Access to expertise:
Outsourcing HR functions to a third-party provider can give SMBs access to specialized expertise in various fields without having to invest in hiring full-time employees. For instance, you can outsource specific functions such as payroll or benefits administration to dedicated service providers with certifications in those areas. Alternatively, you can engage an Administrative Services Organization (ASO) that offers a comprehensive approach to outsourcing the entire HR function. When you choose a complete outsourcing solution, you acquire access to a team of certified and experienced HR professionals who specialize in various areas, including payroll, compliance, benefits administration, employee relations, onboarding/offboarding, training development, and much more. You gain the benefit of their diverse perspectives, extensive knowledge, and proven track record of success. Having this collective expertise can prove to be invaluable in keeping your business compliant and focused on what you do best.
Cost Savings:
In addition to the expertise gained from outsourcing HR, the cost savings can be significant, particularly for SMBs. Each specialist would require a competitive salary, benefits, training, and other associated costs, which can add up quickly. When partnering with The Human Resource Consulting Group, you get a dedicated team of experts that would otherwise be cost-prohibitive. Outsourcing to a team of certified and experienced professionals allows businesses to access this expertise without incurring the high costs associated with hiring individual specialists. Partnering with an ASO can help companies to cut employment costs by up to 70% while leveraging a complete HR solution.
Scalability:
Outsourcing HR can provide a better continuity plan as your business expands and your needs evolve. It can be a lifeline for growing small to medium-sized businesses, allowing them to build redundancies and safeguard their HR functions against the impact of unexpected absences, employee turnover, or other operational disruptions. This way, even if a key HR employee leaves suddenly or is unavailable, the business can still rely on the expertise and support of its provider to keep operations running smoothly while mitigating risk.
By outsourcing your HR functions, you can ensure that you always have the right level of support to meet your changing business needs without worrying about hiring, training, and managing additional staff members.
Confidentiality and Bias:
If the Human Resource function is supported in-house, it's important to recognize that personal relationships will exist between HR staff and other employees of the company. These relationships can lead to biased decision-making or undermine the integrity of employee relations when dealing with performance evaluations or during a more formal employee investigation. In such cases, it can be more effective to outsource the handling of the complaints and performance management to an unbiased third-party HR provider with experience in addressing matters in a fair and impartial manner.
Conclusion
As a business owner, you've likely built your business around your expertise. Just like how you have your area of specialty, it's crucial to recognize the importance of hiring experts in other areas that might not be part of your core function. This allows you to focus on what you do best while leaving the HR details to those who are trained to handle them. Outsourcing HR allows you to have access to the highest quality service without distracting from your mission. So, ask yourself, is it worth sacrificing your valuable time and resources to develop a function that is not part of your value proposition?
At The Human Resource Consulting Group, we specialize in providing customized HR solutions to businesses of all sizes. Whether you are a small business owner seeking to establish compliant and effective HR practices or a large organization looking to enhance your HR operations, we have the expertise and experience to provide tailored solutions to meet your unique needs. With over 30 years of experience and professional certification, our team of experts can help you establish HR practices that align with your business goals, improve employee engagement, and optimize your HR operations.
If you are interested in learning more about how our HR consulting services can benefit your business, please get in touch with us today.
