Hiring for Success
As a business expands, it needs to bring in more employees to meet the demand. But, there is so much that goes into hiring an employee. Small businesses owners, who are often focused on making a business profitable, can benefit from HR outsourcing. In 2004, the Society of Human Resources Management conducted a survey that found 6 out of 10 organizations outsource one or more of its HR functions. Leaving the HR duties to an agency can save you time and money, both of which are valuable assets for new businesses. However, there are also some downsides that come with HR outsourcing. Here are some things to consider as you make a decision.
The most common reasons businesses choose to outsource are to save money and reduce operating costs, to control legal risk and improve compliance, and to gain access to vendor talent and expertise. For small businesses that don’t have the staff or resources to handle the more complicated sides of HR, outsourcing not only frees up valuable time, but it also puts these tasks in the hands of pros.
- Reduce employment-related expenses such as workers’ compensation, health insurance and liability insurance.
- Minimize employment risks. If an employee were to file a lawsuit, most HR vendors are staffed with experts who can help.
- Improve HR efficiencies. No longer will your business have to worry about payroll, filing taxes, and the administration of health benefits.
- Training new employees about harassment and safety can burn through valuable time. Some HR outsourcing agencies offer training about different policies and procedures.
- HR outsourcing companies can help businesses offer a broader range of employee benefits from 401(k) plans to “flex spend” accounts.
- Staff can spend more time focused on the business. Because they aren’t responsible for day-to-day HR duties, business owners and employees can focus on the business’s growth.
As with everything in life, there are also downsides to HR outsourcing. If your business has a complex operating system, from computers to procedures, employee training may take more time than you would prefer. And while HR outsourcing can save a company on various expenses, hidden charges or added fees can be a problem for some.
HR outsourced agencies may not understand your company’s culture, business or the people who you employ. This is especially important when it comes to recruiting and retention of employees.
- Relying on an agency to hire and train staff can sometimes take more time than it would if an in-house HR employee took on the role of training new hires.
- A HR company may not have the same goals and commitments in mind as someone who works on staff.
- There are sometimes hidden or added fees. Making sure you do your research on the recruitment agency and carefully going over agreements is important.
- One of the disadvantages of outsourcing HR responsibilities is that you limit your company's in-house expertise when it comes to employee training, e.g. security, and relationships.
Depending on your business, you may choose to outsource your HR duties to a recruitment agency. In doing so, weigh the costs and benefits to determine whether it is the right option for you. If the company culture and training is something you are concerned about, HR agencies may not be the best option. However, many small businesses gain peace of mind and keep valuable time by leaving responsibilities associated with HR to a knowledgeable team.
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