If you are seeking sound advice for small business development, then this article is for you. Consider this question:
“Can you single-handedly manage all of your HR administration, maintenance and compliance basics so that your business stays afloat?”
Anyone who operates a small business knows that it is a very competitive world out there; most days, all your energy is needed to address day-to-day operations and sales. Very few small business managers have the time or the skills to manage the HR part of their day to day.
Unfortunately, the majority of legal problems facing a small business have nothing to do with the sales part of the business but instead is often employee related. Similarly, as a small business owner, you are not equipped to handle the complexities of the forever changing legal environment in which you operate.
The reality is that only large successful companies can afford to run entire HR departments. For small businesses, HR is a minefield. Business managers and owners have insufficient time to deal with HR problems effectively, which can leave the company open to employee related problems and possible lawsuits.
What is small business HR outsourcing?
Small business outsourcing is the practice of buying certain HR services from an outside source. The services purchased will differ from one company to another. Many small firms outsource all of their HR processes, which may include such things as recruitment and payroll services.
The top three reasons for small business HR outsourcing are access to knowledge, skills and HR support. And best of all, all these reasons not only save you time, but also save you money. The savings in costs come from the company having no need to employ their own HR manager and staff, leaving funding available for focus on generating revenue.
When to HR outsource?
So perhaps you are a small business owner who is wondering when an ideal time to think about small business HR outsourcing might be in terms of your growth and people management needs. Well, it’s dependent on several factors …
How big is your company?
Companies that have fewer than 50 employees typically do not have the luxury of employing HR staff. Usually one of the existing managers takes on these HR responsibilities and become the Jack-of-all-Trades. The primary issues with having this one individual manage everything HR-related is that one person can’t have deep rooted expertise in every part of HR, especially if their primary role is related to operations or strategy.
What services are needed?
Perhaps you have an existing manager who knows how to manage payroll and has existing relationships with workers compensation and benefits providers. By default, that person has taken on the HR role for your business. However, the skills that are needed to manage payroll and benefits are vastly different from the skills, which would be needed to navigate through a performance issue with one of your employees. Payroll and Benefits skills may not be helpful if you know you need to deliver training on HR laws and policies.
So the amount of work taken on by HR outsourcing depends on the nature of your business and where there is a gap in needs vs. available staff. Some items to consider outsourcing may include: discrimination/harassment claims, employee grievances, manager and employee coaching, and dismissals.
What will small business outsourcing cost?
As you consider what specific HR issues you may wish to outsource, you’ll need to ensure the HR services supplied are transparent and properly billed. The costs to outsource will largely depend on the number of HR services provided, but the savings the company will enjoy from not having to employ their own HR staff will be considerable. Also the company will be less vulnerable to lawsuits as the outsource provider will be familiar with up to date and current legislation.
What type of small business HR provider do you want?
Some companies want a more intimate provider where the HR partner will get to know the organization and its business well. These businesses may want flexibility and be sure that their HR provider is just a phone call away when needed. Or a small business may opt to join a small business HR support line; this is not so personal but may suit the type of the business and complement the expertise you already have.
When administrative processes in your business begin to negatively impact productivity, this is the time to consider outsourcing some or all of your HR needs. It is critical to manage employee issues correctly the first time, as they can and will affect the future revenues and success of your business.
Sound advice for small business development indeed! Good small business HR practices will develop and keep employees who are productive, enthusiastic and effective, enabling you to maintain an edge in uncertain economic times and a highly competitive environment.