Why, What and What Not of Effective HR Outsourcing
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Why, What and What Not of Effective HR Outsourcing

by Ashok Grover

The routine activities of HR may guzzle up to 40 percent of the management’s precious day. Is it possible to outsource your HR activities and relax? How to ensure that the employees do not get wrong message instead of feeling valued and remain productive?

For any organization, what could be more frustrating than spending a lot of time on non-revenue-generating activities. It is a fact that the activities like payroll, benefits, staffing and legal compliance, may guzzle up to 40 percent of the management’s precious day. There is no escape from these necessary but time-sucking tasks. So, will it not be a good idea to outsource your HR activities and relax? Is it possible?

No doubt, in the past few years, the outsourced HR industry has grown rapidly. The simple reason for this is that an organization’s focus on its core competencies enables it to grow rapidly without getting bogged down in such necessary time guzzlers. Therefore, outsourcing your human resources department makes a much better sense.

While it is more relevant to smaller businesses, they are further encouraged when they notice even some big organizations resorting to outsourcing in many such areas. It is a competitive world, and to compete with larger companies, there is no escape from offering competitive benefits to nurture top talent.  As such, the biggest motivation for small companies comes from their enhanced ability to offer a range of employee benefits that they could never otherwise afford.

For example, a majority of the employers may not be able to offer their employees beyond one health care plan. However, a large service provider in the field will be able to leverage its buying power and offer dozens of plans to each of its clients. Your manpower requirements are hardly ever so large to employ the kind of recruitment specialist, a placement agency can afford. How many companies can afford to hire a full time legal consultant? And even those who can, may still go for outside consultation to take advantage of an expert pool available with specialized firms. Difference in labor laws from state to state and keeping updated with the changes is a challenge for a company; but a normal, routine activity for a legal firm. So, it is only logical to take the help of the specialists, what they are specialized in and concentrate on what your organization does best.

Undoubtedly, there is tremendous benefit to outsourcing the administrative side of HR, but the human side should never be overlooked. As a business, an organization needs to identify what HR does to increase the value of the human resource within the company and retain that in house. The employees must feel valued to be productive. If at all they ever get an impression that the things are just routine and formality, organizations will be failing in its duty. So, even in the outsourced areas, the human touch has to remain within the organization.

The importance of human angle has added another angle to outsourcing. At times, large companies enter into agreements with external HR firms; but host their representatives within their company, or even shift their own employees to the rolls of external HR firm. The message is clear “We want to focus on our core competencies: but we still need HR talent within our organization, close to our people.”

Ashok Grover is an expert in people assessment and focused executive / leadership coaching. He is Director at Skillscape, a company with a vision of Value Creation by enhancing people and organizational competencies.

His last assignment was with the JBM Group as Corporate Chief Human Resource Officer. He has over four decades of experience in operations, materials, information technology and people development with Parle Group, Mohan Meakins Group, Hawkins Cookers Limited and JBM Group.

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