Is an HR body only concerned with rangoli making competitions or conducting ice breaking sessions?

Its almost the end of 2019, the start up ecosystem is flourishing like it never did before. With such pace in the industry and technology, it is also time for our perceptions to change. It is time that we realize that an HR Body has more to it than just conducting rangoli making competitions or ice-breaking sessions. And you know what’s worse? The HR employees are usually just supposed to conduct these sessions and never really be a part of it, because well, they are usually not seen at par with other employees of the organisation.

It’s something to think about that if we do consider such activities as important to establish a culture in an organisation then why the HR body, the facilitators of this process are considered mediocre. Why is it that hiring is most commonly outsourced but this service is still a poorly paid internal resource?!

 Most business owners agree that their employees are their most valuable assets. As such, managing human resources has become a critical role in managing a business. Yet for some businesses, the various functions of the HR department are too comprehensive and complex to maintain in-house. In these situations, a business can achieve the same level of efficiency and workforce management by outsourcing HR. The benefits of outsourcing HR are plentiful and can have a significant impact on your bottom line.

HR outsourcing reduces the fixed cost of managing employees. These human resources firms are more efficient than hiring new workers. The talent and infrastructure are already in place. Small businesses save money and time by hiring HR firms.

Small businesses are more likely to outsource other human resource functions. These include payroll administration and recruitment amongst other things. They usually keep HR staff to communicate with employees in core business areas.

According to a study by McKinley in 2012 noticed that businesses that outsourced grew 7-9 percent faster than firms that didn't. That is also true because fast-growing companies are more likely to need HR outsourcing. They also had 10-14 percent lower employee turnover and were 50 percent less likely to go out of business. Their administrative costs were$450 lower per employee.

One study showed that companies saved from 24-32 percent the cost of hiring the HR staff in-house.

How HR Outsourcing Affects Economy

Human resource outsourcing has a positive effect on the economy of a country for three reasons. Primarily, it helps small businesses compete. It allows them to take advantage of sophisticated HR firms instead of building that expertise in-house. They can focus on their core businesses and maintain their competitive advantage. The company's leaders don't have to get distracted by HR issues.

Secondly, it lowers business costs for all corporations. They can use lower costs to drop their prices, helping consumers. It also makes them more profitable, benefiting stockholders.

Lastly, higher profitability allows firms to increase skilled positions in their core competencies. Although many HR jobs could be lost to overseas companies, they could be offset by the jobs added by fast-growing firms.

It gets one thinking that when the role of an HR is so crucial in the growth of a company, then why do we still devalue its service.

It’s time we understand the role an HR body plays in an organisation and the perks it brings with itself. It is with this understanding that we must employ/outsource HR as a strategic department. Here are the top ten advantages of outsourcing HR functions.

1. Cost Savings

Overhead costs associated with performing HR services are typically very high. A fully-functional HR department requires additional office space and highly trained and experienced HR staff. Many small businesses simply can’t afford this expense and find that it’s more cost-effective to outsource HR functions. Outsourcing HR helps reduce your costs and helps you avoid trying to financially maintain nonrevenue-generating back-office expenses. Furthermore, HR outsourcing costs are variable and can be reduced when business needs warrant.

2. Payroll and Accounting

The cost of outsourcing payroll is very cheap compared to the cost of maintaining an in-house payroll staff. The outsourced company can be responsible for employee pay slips, advising on tax and deduction questions and also offer a payroll analysis for accounting purposes. This frees up time in calculating the payroll and dealing with different and sometimes difficult employee situations.

3. Global Talent

One of the great benefits of outsourcing is expanding your perspectives. When HR functions are outsourced to PEO companies, you get your HR services performed by the best talent around the globe.

4. Risk Management

Employment and labor laws change regularly, and it can be difficult for you to remain up-to-date on regulations that affect your workplace. Outsourcing firms employ HR professionals whose purpose is to stay current on federal and state employment laws. This will help you comply with these laws and avoid costly lawsuits brought on by employees. HR firms also maintain and audit company policies and practices to ensure your organization and your employees’ best interests are protected.

5. Efficiency

Maintaining an efficient and productive workplace is critical. Outsourcing HR functions creates greater efficiency within human resources systems. Advanced human resources technology utilized by outsourcing providers, helps streamline important HR functions such as payroll, benefit administration and compliance management. Outsourcing helps you and your managers spend less time on paperwork and more time dedicated to improving the efficiency and effectiveness of your workforce.

6. Employee Development

Outsourcing HR functions can help you manage employee performance and development. HR providers implement performance management plans to ensure employees comply with company policies and procedures and successfully meet your business goals. Outsourcing firms periodically monitor employee performance and report findings to management. This reduces the workload of your managers by minimizing their administrative responsibilities.

7. Help with compliance

This is one area where many small businesses really struggle to keep up, especially with the changing laws pertaining to hiring, insurance claims management, and benefits regulations. The greatest challenge is that failure to comply can lead to serious financial consequences. Outsourcing HR functions to a trusted provider can help you understand and take action to comply with these laws and regulations.

8. Reduce Employment-Related Expenses

While there are hundreds of corporate cost-cutting areas to consider, labor costs account for one of the largest operating expenses in a business. Beyond payroll and tax overhead, other expenses are related to health insurance premiums, workers’ compensation insurance, recruiting fees, payroll processing, and legal costs.

9. Health Insurance Benefits

As our economy improves, employers are looking for ways to incentivize and motivate their staff. PEO firms provide small employers the unique opportunity to offer their staff a robust and comprehensive array of employee benefits that are typically available to only the largest corporations. These robust offerings include a wide range of major medical plans and voluntary benefit offerings, supported by the right outsourcing partner who shares the same vision as the organization.