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What are the benefits of outsourcing HR?

Whatever the size of your business, proper human resources management is vital to a smoothly run operation. Hiring a HR team can be costly, could outsourcing be a better solution? 

19/01/2022

Whatever the size of your business, proper human resources management is vital to a smoothly run operation. Hiring a HR team can be costly, could outsourcing be a better solution? 

Sometimes it can be easy to underestimate the importance of HR to a business. This is especially true for SMEs where the relatively small workforce and more casual kinds of hierarchy can make it seem debatable whether there’s need for a full-time HR person, or team, at all.

But, whatever the size of a business, HR is a vital function even if it does seem like an unnecessary overhead for much of the time.

This is why numerous businesses choose to outsource all or some of their HR services to expert providers like Sentient.

The advantages of out-sourcing HR

There’s no disputing the fact that outsourcing has a number of benefits, whatever sector the business might be in, Several of these benefits are arguably only made possible by using and external resource – although it’s a wider debate about just how important these really are to some businesses.

Comprehensive skills and knowledge

When you choose to use a fully-accredited external HR adviser you can be fairly confident that they will have skills and knowledge in depth about all aspects of HR. It’s a wide-ranging field that may be needed to deal with everything from payroll to handling under-performing or contract-breaking employees. So this can be hard for a small in-house team to offer such a comprehensive range of services.

In addition, employment law changes frequently making it quite a challenge to keep abreast of all of its finer nuances. But you can generally be fairly confident that a dedicated and specialist supplier of HR services will be fully up to speed.

As ignorance of the law is never a defence, the advantages of this are obvious.

A more efficient service

Generally, when you use an outsourced service, you will be freeing up an existing employee from potentially time-consuming activities. This will give them more time to spend on other, more core, duties. As you are usually free to mix and match the way that you use your own internal HR services with ones provided by an external supplier, these can dovetail neatly. The ability to plan like this will inevitably lead to greater efficiency and a more stream-lined HR service. Something that both you and your employees are certain to appreciate.

Reduced costs

Finding, hiring and employing a full-time HR professional for any business can be a long, drawn-out process, as well as being one that involves prolonged expense. So outsourcing gives you a definite opportunity to reduce costs.

Then there is the consideration of the unexpected and unwanted costs that poor people management can involve. For example, by failing to comply with employment law you can easily find yourself being taken to an employment tribunal. This, in turn, could make you liable for a large fine as well as having to pay appreciable costs – all of which could have been avoided if you had taken more expert advice.

Saved management time

However hands-off you aim to be in terms of HR, as a manager you are always going to occasionally be drawn into spending time over it. But, by using an outsourced supplier, it will make it considerably easier schedule that time, as well as to receive regular, formal reports in the most convenient formats for you.

It can also be a real advantage to use an external supplier who may be able to give a genuinely objective opinion about HR matters for your business – not something that an in-house HR manager may always feel able to do.

The advantages of an in-house service

That’s not to say that it’s always an open and shut case as to whether it may be best to outsource. There are definitely benefits to having an in-house service too. So it’s a question of weighing the two options up. and possibly even combining them.

Closer contact with staff

As already mentioned, a feature of most SME is that there is a fairly close-knit atmosphere with staff. This works both ways in that, as a manager, you’ll have a good idea of what’s happening in the business. Staff also feel more closely connected to how the business is being managed and its overall objectives and expectations of them. This is an atmosphere that can be fostered with an in-house HR team who, themselves, will feel that they’re linked more closely with the business

Knowledge of the business and its employees

Every business is unique in its own way with its own character, culture and way of operating. One can only really get to understand this fully by working in the company. So it’s an insight that will come easily to an in-house team and may never be 100% appreciated by a third party.

Constant contact

If you use an external supplier, you will be one of many clients for them. So, while companies like Sentient do all they can to provide a personal service, this is never going to be the same as having a dedicated HR person, or people, always on call.

Other things to consider

As you can see, there are arguments for both approaches and there are also a number of other elements to consider. The first is how much you would mind giving up some of the control you have over your HR function. Outsourcing will definitely lead to this to a certain extent.

You also have to consider the effect it may have on your staff and the message that it may send out to them.

However, as long as you handle things sensitively and work hand-in-hand with the HR provider, neither of these need to be issues. It could even be that you keep some elements of your HR operation in-house and delegate others to create the ideal balance.

This is something that we have done very successfully with many of our clients at Sentient, and they haven’t looked back. If you’d like to discuss our HR services and how we could help, we’d love to talk.

Just get in touch today and we’ll arrange for one of our HR specialists to tell you more.

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