Regardless of the size of your business or the sector you operate in, it is inevitable that as an employer that you will encounter HR issues. As a business grows, the potential for experiencing HR challenges increases, meaning more pressure on manages or HR staff (if you have them) and less time to dedicate elsewhere.
In the following blog post, we will explain 3 ways that outsourcing HR can help SMEs. Starting with a brief explanation of what HR outsourcing generally involves.
What does ‘Outsourcing HR’ mean?
‘Outsourcing HR’ is the process by which a business sub-contracts their human resources functions to an external supplier.
Businesses choose to outsource HR for different reasons and Human Resources consultancies and firms offer a variety services. However, commonly speaking, a company that offers HR solutions will take care of:
- Staffing requirements and organisational structure
- Recruiting staff as well as training and development
- Tracking strategic goals for individuals as well as departments
- Employee and manager training
They also offer specialist advice on the complex and changeable world of employment legislation. For example, a company that offers HR outsourcing services could assist with:
- The drafting of contracts of employment
- The production of employee handbooks
- Reviews of employment law and management practices
- Keeping employers up to date with the latest employment law developments
- Health and safety checks
- Employment tribunal support
Now that we know what outsourcing HR is, it is time to discuss how it can benefit small and medium sized enterprises.
1) Access to Human Resources Expertise
Even if your business has an existing HR department, outsourcing HR gives employers and busy HR professionals direct access to Human Resources expertise.
Employment legislation is changeable and can often seem complex, having an Employment Law and HR specialist on hand whenever a problem arises means that issues will be resolved efficiently, in compliance with the latest legislation and with minimal impact on your business.
But as well as having experts on hand to solve problems when they arise, having access to expertise means that employers will often receive quality training on human resources and employment law developments. Procedure is often critical with many employment law and HR issues; through specialist training, employers can ensure that issues do not increase in severity due to non-compliance.
2) Reduced Risk
Outsourcing HR to a team of specialists means that employers can have peace of mind. By training employers on their responsibilities, ensuring compliance with regulations and putting uniformed procedures in place for certain issues, a HR specialist can help to reduce the risk faced by small and medium sized businesses.
In 2015/16, 83,031 claims were brought to employment tribunals. Clearly, failing to follow correct procedure in certain situations can be extremely risky for businesses.
The table below displays the highest and average awards given in employment tribunals for a number of different employment issues:
|2015/2016||Highest award||Mean award*||Median award**|
|Sexual orientation discrimination||£20,192||£20,192||£20,192|
ET and EAT Tables 2015 to 2016 (Excel file) on Tribunals and gender recognition certificate statistics quarterly: April to June 2016 – GOV.UK.
With figures as high as £1,762,130 being awarded in sex discrimination claims, ensuring that your workplace is a fair, safe environment and that proper procedures are followed is crucial.
An example of a situation where there is a great deal of risk for employers is during the dismissal of an employee.
When dismissing an employee, a fair reason must be given and a fair procedure must be followed. If an employer fails to follow the correct guidelines when making a dismissal they could leave themselves vulnerable to unfair dismissal claims.
3) Increased Efficiency
Having the support of a Human Resources specialist can increase efficiency in the workplace. Instead of spending valuable time and resources tackling problems with staffing or attempting to deal with complicated employment law issues, outsourcing HR allows employers and senior members of staff to concentrate on keeping everything else running smoothly.
As well as freeing up time and resources, outsourcing HR means that when issues arise, you will have employment law specialists on hand to offer practical solutions. Problems will be addressed and solved quickly, using the correct procedures – minimising the impact they have on the day to day of your business.
If you struggle to keep up to date with the latest employment legislation, are uncertain about what procedures to follow in when faced with a HR issue or are spending too much time addressing problems with staffing, outsourcing HR could be beneficial for your business.