Human resources are a critical component of any business, yet many companies struggle to effectively manage their own HR department. As someone who’s business has expanded from sole trader to needing more support I know that outsourcing your human resources can be an excellent way to maximise efficiency, reduce costs, and streamline the entire HR process. Research suggests that around 39% of SMBs in the UK outsource some or all parts of their HR to third parties. If you’re on the fence about whether or not you should outsource HR or hire in-house, this post looks at the benefits of outsourcing.
Improved legal compliance
As laws regarding employment and HR practices change, smaller businesses that handle their own HR often struggle to keep up with the latest regulations. Outsourcing your HR means having your procedures and policies managed by a third-party team familiar with all applicable legislation and responsible for adhering to all applicable rules and regulations.
They can include;
- Employment Rights Act 1996
- The Maternity and Parental Leave Regulations 1999
- Working Time Regulations 1998
- Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and the Agency Workers Regulations 2010.
- Transfer of Undertakings (Protection of Employment) Regulations 2006.
- Equality Act 2010.
- Employment Relations Act 1999.
It’s more cost effective than hiring and training HR in-house
Hiring and training a full-time employee to handle your HR is costly (a HR manager alone can cost your company around £50,000 for an annual salary), and many companies struggle to find the right person for the job. Outsourcing your HR can solve your hiring and training problems cost-effectively.
Outsourcing your HR departments allows you to receive a fully trained, qualified human resources team ready to go as soon as they’re hired. Depending on your hr outsourcing model, you can also avoid the costs of ongoing training, employee benefits, payroll, taxes, etc., associated with having a full-time employee.
Offer a more well rounded service
Not only can outsourcing your HR offer your business cost savings, but it can also provide a more well-rounded and robust HR service. Many providers offering outsourced HR services have teams of experts and specialists to handle your HR needs. This allows your in-house HR team to focus on other, more critical areas of your business. In many cases, outsourcing your HR can allow your in-house team to focus on critical areas of your business, such as employee development and training, strategic planning and development, and other areas that are important for your company’s success.
Minimise and manage risk more effectively
Many businesses struggle to effectively manage and minimise the risks associated with hiring, onboarding, and retaining employees. Outsourcing your HR allows you to receive support for all areas of risk management concerning employees. Outsourcing also allows you to outsource your HR risk and ensure that your department is managed to minimise the risk of issues such as discrimination and wrongful termination. A third-party provider can assist your business in properly screening and vetting potential new hires, ensuring that your hiring process is thorough and legally compliant.
HR outsourcing is a cost-effective solution to many problems with managing your own HR department. Outsourcing your HR can help you avoid hiring mistakes, improve legal compliance, and increase your company’s risk management efforts. With the right outsourcing partner, your business can take advantage of the many benefits of having a dedicated HR team. With the assistance of an outsourced team, your business can save time and money while increasing efficiency across the board.