Human resource functions include onboarding, recruitment, time management, payroll management, and admin work. These duties consume a lot of time and can be costly to manage on your own as a small company. You can benefit from the economies of scale an outsourced company offers. Additionally, errors on the payroll are decreased, security is improved, compliance with legislation is ensured, and the workload for you and your employees is lessened. We look at the reasons why it makes sense to outsource HR functions. Let us look at some specifics.
More Time for Strategic HR Functions
A lot of time is spent dealing with leave and sick leave management and payroll queries. By outsourcing HR admin functions such as these, your human resources manager and team can focus on well-being initiatives and employee development, which are more strategic tasks. This will increase the satisfaction of the HR team, who can work at a higher level, and other employees benefit from enhanced growth in the company and improvements in wellness issues.
Ensure Compliance
A fully staffed human resources department is costly. But, without outsourcing, you need to hire experts in labour law, tax legislation, data protection, and changing wage and salary laws. This expertise is unlikely to exist in one person, meaning that you have to hire a number of employees in HR to make sure that you are compliant at all times and have access to the latest regulations. If a key employee is on leave or sick, you can have difficulty coping with certain issues that arise during their absence.
Better Data
The HR and payroll functions should ideally be outsourced together. This results in a single database that is usable across all HR functions as opposed to one for HR and another for payroll. Data for the latter is typically updated more frequently and helps to ensure the accuracy of your database as a whole. Access is controlled by you, meaning enhanced security, by only permitting user rights to those who work directly with certain data and according to the level they operate at.
Reducing Manual Processing
Prior to the covid pandemic, three-fifths of employees claimed to have been underpaid, with a third of these employees saying that such errors occurred routinely on their payslips and salary deposits by the company, while other employees stated that they had been overpaid, according to one study.
When you outsource HR functions, there is a reduction in manual processing. Checking data for correctness is increased by applicable procedures. When you outsource to a company like The HR Dept, your HR functions become manageable, with less errors across the different tasks as the outsourcing company has the expertise and systems to ensure accuracy.
Agility
The payroll and HR database contains massive quantities of data. With an outsourced HR function, you can work with or transfer data quickly and accurately. This improves the turnaround time for making strategic decisions. For example, the inputs for the annual Workplace Skills Plan take time to collate and a wealth of information must be waded through that is stored in different manual systems. Once outsourced, this can be compiled quickly and accurately.
Lower Expenditure on Technology
Outsourcing gives you access to the integrated technology needed for decision-making and completing processes and procedures. You will not need to buy or develop interfaces to get the different systems talking to each other. You will not need to invest in the right technologies or maintain these systems. Upgrades will be available in your outsourcing agreement.
Avoiding the Costs of Non-Compliance
Due to the covid pandemic, many governments across the globe have brought about changes to legislation that affects payroll. Over a single month in 2020, these changes increased by a factor of four as legislators sought to reduce the economic effects of the pandemic on their citizens. Non-compliance with this legislation is accompanied by hefty fines. Over a three-year period, these penalties almost hit the two-million-pound mark. However, when a company outsources, they have access to the latest information promptly and adjustments can be made smoothly, and penalties avoided.
Working Around the Skills Crisis
Businesses compete with one another for the best, most qualified employees. This applies to the human resources department as well as other areas of the business. Getting, training, and retaining suitably skilled HR personnel can be a nightmare without outsourcing. With the industry-wide expertise that HR companies bring to the table, you will have access to practical insights and the most modern tools available. The entire recruitment process can be handled for you. You will also have the ability to pin down skills gaps and develop plans to upgrade employee skills.
With many competitors choosing to outsource their HR functions, you need to at least be on an even par or keep ahead in your industry.
