GM BUSINESS connect
Businesses Under Pressure - The Rising Cost and Overheads Conundrum
“Higher employment costs impact on the bottom line and reduce the resources available to invest in the business and people” Jane Gratton, Head of Business Environment at the British Chambers of Commerce
With ever increasing costs, like the National Living Wage, which has impacted 55% of businesses in Northern England, and 51% in the Midlands, businesses need to plan ahead to consider ways to absorb future costs. Human Resources Outsourcing (HRO) is a viable solution with sustainable results that can contribute to this direction.
What is HRO? In simple terms, it’s sub-contracting human resources functions to an external supplier.
Why do it? What are the benefits? Reviews of business processes have led many organisations to decide that it makes business sense to sub-contract some or all non-core activities to specialist providers. (Core activities are the functions that directly make money for your organisations, e.g. Sales. Non-core activities, are all support functions, which, although they do not make money, they are necessary to run a business, e.g. IT, HR, Legal, etc).
fully-fledged HR department or full time HR staff. For example, they may not recruit very often or have many employees within their business and in these cases, it makes sense to use an outsourced HR Support, which covers their needs. 2. Flexibility and Decreased Overheads This is the result of the first point since, in practice, you use them whenever you want. 3. Access to Expertise You have access to knowledge and skills that you wouldn’t be able to afford otherwise, unless you hired a top-notch HR Professional. 4. Free existing HR people from specific jobs This means they can focus on more strategic aspects rather than for example policies and procedures.
Which companies/organisations can benefit from such services? Various Case-Studies /Examples: • It can be an SME, which has not had Human Resources up to now, and would like to introduce the HR function gradually, before hiring a full-time person.
The CIPD (Chartered Institute of Personnel & Development) identifies a number of strategic drivers and reasons for outsourcing HR services:
• It can be a company that already has an HR Professional, who however, is quite junior. In this case, HRO can be used to 1) mentor the HR Professional and 2) help them to introduce HR policies, procedures, systems that they would not be able to introduce on their own.
1. Reduced Cost Outsourcing your HR function can significantly reduce your costs, because many businesses, particularly small businesses, do not need a
• Large organisations who already have HR Professionals, but who however, because of specific business demands, need external help and support for specific projects, like,
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re-design their existing Performance Appraisal System, carry out information sessions for employees, design their Talent Management System, etc. So, support can be 1) one-off, 2) on-going, or 3) on a project-basis and can take many forms to fit the specific needs of the organisation.
Do I need HR in first place? 1. Cost Savings HR can contribute to cost savings. Through implementing an HR strategy that supports your business goals you make your business more efficient through the planned use of human resources. 2. Managing Performance All employees work towards the common goal to improve business performance through the fulfilling of their own personal objectives and everybody is aligned behind the same purpose. Performance management also includes managing poor performance as well as rewarding excellent performance, and hence contributes to a climate of fairness.
3. Provide guidance with Employment Legislation Employment legislation is changing constantly and it is hard to keep up with the ever shifting sands that the government dictates. HR ensures that internal HR policies and employee handbooks are kept up to date, they are well communicated to all staff and respective training is provided to all. 4. Training & development HR supports training and development initiatives by assisting with a company-wide skills analysis, developing and coordinating a training plan, identifying training and development initiatives and delivering appropriate workshops. 5. Recruitment HR works with managers to draft adverts, identify an appropriate advertising medium, develop job descriptions, undertake shortlisting, develop interview processes and questions and organise assessment days. These are just some of the few areas that Human Resources can support your organisation.
Dr Maria Katsarou Managing Director, Leadership Psychology Institute
Maria@leadershipsy.com Maria has 20 years of experience in partnering with senior teams across many business sectors. She holds a BA in Management and Organisational Behaviour, MA in Human Resources Management, an MSc in Psychology and a Doctorate in Leadership Psychology. She holds the Henley Certificate in Coaching, is an accredited Coach by the International Coaching Federation as well as accredited in various psychometrics by the British Psychological Society.
Contact us today for a free consultation on how HRO can become part of your Business Planning: email@example.com
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