Human Resources: An Overview
The Human resource (HR) department is responsible for the recruitment, training, developing, and looking into the formalities of the departing employees. Human resource is the backbone of any business and plays a crucial role in its smooth operation. Today, the role of HR is not limited to managing human capital i.e. employees, alone. Whether you have an HR consultant on board or an in-house HR team, the HR department has to take care of the employees’ payrolls, compensation, incentives, employee-centric policies creation, enforcement of those policies, and benefits management. They also ensure that the practices followed by the organization adhere to the employment laws.
To make the best out of the global recruitment strategy, small and big organizations are leaning toward availing the human resources outsourcing services. Opting for a human resource service provider has become the new normal.
In this blog, we will explore how human resource outsourcing has reaped many benefits for small and medium enterprises, specifically startups.
How Outsourcing Human Resource Services Can Benefit Your Organization?
The following is how outsourcing HR services can contribute to the success of your organization:
1. Talent Acquisition and Management
The human resource team helps acquire new talent and manage it end-to-end by catering to all employee and organizational needs. Let's see how an HR advisory service can benefit your organization:
Having a local human resource service provider can benefit global organizations to look after the recruitment process as they are well aware of the market, employee expectations, and ground realities at the local level. They stand a better chance of choosing the right candidate from a diverse talent pool for your organization. The HR consultant will have a better understanding of things that matter to locals for keeping their happiness index high which in turn will improve their performance.
With the global expansion of your business, an organization deals with employees from different cultures. An outsourced HR firm from that same region can understand and motivate those employees better. The firm will also make sure that your organization complies with the local and state employment laws of that region.
With the current technological shift, organizations need to have an advisor or HR consultant who is familiar with both modern and traditional HR concepts. While some of the employees have already taken the technological leap, others still resonate with the older ways. To balance this equation, a human resource outsourcing service will provide the middle ground to make this transition easier.
2. Compensation Management
Hiring globally can turn out to be cost-efficient. Organizations all over the world are choosing this strategy to cut costs by hiring from locations where compensations are affordable while ensuring that they are bringing competent resources onboard. However, to ensure that your organization is not overpaying a candidate, it's important to better understand the job market at the country and city levels.
This is where the human resource service providers come in. An outsourced HR consultant will develop an understanding of the type of resource required by your organization with the end goal to help you find the best affordable candidate in the market while staying market-competitive.
There are some other ways in which outsourcing HR services prove to be beneficial:
Every country has its laws regarding retirement benefits, holidays, taxes, and paid leaves i.e. sick leaves, maternity leaves, etc. An outsourced HR service will manage your human capital according to regional laws.
An in-house compensation management department sometimes costs more than an outsourced one as it is a whole department to maintain. So it is better to hire an expert who is cognizant of the current legal environment and has a unique insight into your competitors’ compensation structure.
3. Employee Performance Management
One of the main functions of an HR department is to evaluate the performance of its employees and ensure that they are working towards organizational goals.
Let’s see how an outsourced HR service will help you in this regard:
An outsourced HR consultant works with many organizations and has deep knowledge of the pros and cons of all the appraisal tools and methodologies. They can better recommend you the appraisal tool or approach that best fits your organization keeping in mind the size, number of employees, daily activities, and the organizational goals to achieve.
When you hire a third party to evaluate the performance of your employees, the HR service provider will be responsible for defining the KPIs for the employees while working closely with the management. Doing so will take a lot of burden off the management’s shoulders and you will receive an accurate report of how your employees are performing. Hence, a win-win situation.
4. Cost Effective
In small companies, there is a fluctuation in HR's workload. The month-end is the busiest when salaries are processed. Apart from that, once the organization policies have been created, the role of HR gets limited to recruitment only, that too when there is an opening. So if you have a small organization or startup where HR services are required only on a need basis, outsourcing is the most economical solution as you only pay when there is a need.
Other than that if you decide to outsource your human resources you will find experts for each HR function and what’s better than being able to hire an expert according to your needs while staying within your budget? Considering all the ways you can use the money you saved by outsourcing human resource functions, you can:
● Generate ROI by spending these resources on core business activities.
● Use it to compensate your employees better
● Use it to promote your business.
5. Reduced Workload
One of the most overlooked beneficial aspects of outsourcing HR services for a small and medium enterprise is the reduced workload on employees. Employees in startups or small companies tend to wear multiple hats and are known for their multitasking ability. While the employees can still volunteer for HR-related tasks, but keep in mind that HR tasks are very time sensitive. For example, if you do not get back to a potential resource on time, they may accept an offer at some other organization. Several other such examples may result in your employees having to prioritize the HR tasks over theirs, which might further require the employees to work overtime to complete their tasks. It can lead to an increase in stress, and work pressure, affect the work-life balance, and end up in a burnout situation. They might still be able to meet the deadlines but it will affect the quality of the work.
Outsourcing HR services will prove to be efficient every time a new policy is created i.e. the management wouldn't see it as extra work because HR will be there to create handbooks, policy docs, and other paperwork. Similarly, when you are hiring new candidates for the job the management does not have to sit through the initial screening and interviews rather they can show up at only the final interview. It will help them save valuable time, increase job satisfaction for them and help your organization flourish. It is also cost-efficient since it will take the workload off your employees that too in a fraction of the amount you would otherwise pay to a permanent experienced HR resource.
6. Strategic HR Planning
HR strategy provides your organization with a roadmap to follow to achieve organizational goals. Coming up with an HR strategy that perfectly caters to your organization’s needs and goals might become difficult when using generic templates, as one size doesn’t fit all.
To build a strategy that will both improve your company’s overall performance and its ROI, you need an expert. Outsourcing HR strategy to an expert will help you in the long run. You can hire an outsourced HR firm to provide you with an analytical framework and market competitive practices. Your organization’s HR department, if it exists, might already have so much on its plate and may even not have the relevant background required for strategy planning but an outsourced HR consultant who will be getting paid for only this purpose will ensure that you follow the latest technologies and strategies to achieve your goals.
If you are a new company and cannot afford an experienced resource but would like to have a professional HR that can guide you by sharing various options to develop your organization as per the industry's best practices, outsourcing it is the way to go.