How HR Outsourcing is Saving Large and Small Operations

Today an estimated 80 percent of companies outsource all or part of their HR needs

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In an age of skilled labor shortages and tight profit margins, the expenditure on HR Outsourcing might not be top of mind for many companies.  But it should be, according to workplace statistics, as the reality is that both small and large businesses are capturing big savings, ROI, and more efficient production when they turn HR functions over to outsourced experts.

Outsourcing creates operational efficiencies and manages projects, functions, and complexities where needed.  And, it doesn’t matter what level of sophistication or size of your operation is, as the outsource functionality can be scaled according to your resource needs.  Here are two cases that demonstrate the effect HR Outsourcing has on different sizes and scopes of operations.

Case In Point: How a Sophisticated, Larger Operation Benefits from HR Outsourcing

Take the case of a larger organization with more than 100 employees, whose HR function was stretched and consumed with managing problem areas rather than effectively managing focus areas.

Spending Time Where It Counts:  The company’s in-house HR manager was spending most of her time focused on managing the compliance challenges that come with her role like managing employee benefit plans, ensuring employee paperwork was complete and dealing with employee relations challenges and discipline issues.  Overall, the culture was good, but their turnover was higher than they wanted and they sensed that employees weren’t fully engaged.  The HR manager and company leaders were confident their culture could be significantly improved with additional training programs and by developing an employee appreciation program, however, the HR manager didn’t have the capacity due to “fires” that kept coming up.

After outsourcing the HR department, the manager could focus on her core competencies and could help grow the company with training and recognition initiatives that truly impacted the culture of the company – versus getting bogged down with necessary HR time sucks.

Case In Point:  How a Small Business Thrives Using HR Outsourcing

In the case of this smaller organization with 45 employees, the office manager’s role became inundated with HR responsibilities outside of his scope and specialization.

Adding Specialization for Protection and Effective Results:  The company’s office manager was responsible for accounting and HR.  As is typically the case in small office environments, the manager didn’t have a background in HR but took on those responsibilities because he was the primary administrative person in the office.  Meanwhile, the employee count grew, and so did the employee challenges.  The office manager was not only stretched beyond his role, he worried that he could be putting the company at risk due to a lack of knowledge and ability to keep up with employer regulations.

Once they outsourced their HR department, the manager was able to focus his strengths and energy on his accounting responsibilities, and more importantly, the leadership is no longer worried about being at risk of breaking employer regulations and the potential fines that could follow.

Why do businesses outsource HR?

  • Lower operational and labor costs save money.
  • Breadth of expertise they could never afford in a permanent capacity.
  • Freeing up internal resources to focus on core strengths.
  • Improved and focused recruitment.
  • Robust tools and technology.
  • Current on benefits management and HR compliance issues.

Running an effective, well-rounded HR department can require a significant amount of money and full time resources.  Many organizations perform the math and conclude they cannot afford to fill all HR capacities.  HR Outsourcing—for all or part of their HR needs—has proven to be an effective means to handle HR functions ranging from benefits, hiring, training, complaints, and recruitment, to retention, terminations, and compliance.

K·Coe People can develop a strategy and solution that works for your organization.  Our HR specialists provide the resource, expertise, and solutions to make your business leaner, smarter, and more profitable.  For more information, visit K·Coe People, or contact us.

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