Outsourcing your HR department - is it worth it?

Here’s why it may be worth it:

Cost and time savings

It goes without saying that outsourcing the HR function will save a great deal of time for the entrepreneur. The business will save from having permanent personnel working on HR services and opt to have a service provider taking care of its HR function at a much lower cost - not because it is cheaper, but because the function is managed more efficiently.

Consider for a moment the evolution of many growth businesses. Initially the CEO is responsible for the recruitment of staff, but this role morphs over time and often the finance or operations functions end up falling into the role. With a myriad of labour, Employment Equity and B-BBEE legislation now influencing hiring decisions, the wrong people may be tasked with a critical function. 

Outsourcing your HR department can lead to cost reductions by optimising HR operations and entrusting specialised HR professionals to manage these functions. Additionally, substantial savings can be achieved in managing payroll, benefits administration, labour expenses, workers' compensation, and other critical HR aspects.

Access to experts

Outsourcing the HR function helps business owners to access top quality HR service providers in the market without having to hire an HR professional. The HR service providers will assist in providing a wealth of knowledge and expertise in terms of HR compliance. Businesses may access a wider skill set, obtain insightful knowledge and ensure that HR procedures comply with legal and industry standards by utilising the experience of external HR experts. This collaborative approach promotes innovation and continuous improvement within the HR department in addition to improving operational efficiency.

Undivided attention to core business needs 

By outsourcing HR, businesses can redirect their focus and resources back to their core needs and operations. Organisations can redirect more time and resources toward strategic initiatives, innovation, and revenue-generating activities by contracting with outside service providers to handle administrative HR tasks that will assist in the success of the business. This change enables businesses to focus on their core competencies, such as product development or service enhancement, customer support, or market expansion.

Increased employee experience and satisfaction 

HR function outsourcing can result in improved service delivery, which will raise employee satisfaction and experience levels across the board for the company. Businesses may offer prompt and accurate assistance in areas like payroll and leave administration, employee relations, training, and development, creating a positive work environment, and increasing employee engagement by utilising the experience of outside HR specialists. It has been proven that when employees are satisfied with the company culture, they are more likely to perform better and market their company. 

Play to your strengths 

The HR department handles a wide range of duties, including recruitment, processing payroll, managing salaries and leaves, providing IT support, fostering positive working relationships, and wellness initiatives. Businesses have areas in which they excel and areas in which they might struggle, just as individuals do. If a company is particularly good at some HR duties, it might decide to contract with outside HR specialists to handle the duties in which it is not as skilled. For example, a business may perform exceptionally well in hiring but struggle with managing payroll. One workable solution in this kind of situation would be to contract out the payroll function to HR experts who specialise in this field. HR management, HR administration, and recruitment are a few HR tasks that companies can contract out.

Align your culture with your HR Department

Often the burden of HR gives the HR department a bad rep. Ensuring people can trust the HR function is difficult if the same department deals with disciplinary issues and legal and compliance issues. Depending on the company culture, outsource the functions that could make it difficult for employees to engage with HR. Unfortunately, the best companies to work for still have to deal with disciplinary issues, but outsourcing this function could create a friendlier interaction between employees and the HR department - and positively contribute to organisational culture.

Often the greatest barrier to outsourcing is the perception that it will be hard work to onboard an external company to manage the HR department. But if you think about the fact that this could save you money, give the organisation access to expert guidance, allow the business to focus on its core capabilities and positively contribute to the company’s culture - is it not worth it? Absolutely!

Nelly Mohale is Head of Human Capital at Decusatio, an outsourced HR solution based in Rosebank. She works with high-growth businesses to identify talent that can positively contribute to growing organisations. Nelly’s strength is building out innovative strategies to recruit talent. To find out more about some of the recent projects Nelly has been involved in get in touch with her on nelly@decusatio.co.za.

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