What is the most important factor for business growth? While many would mention market research or financial strategy, it’s crucial to keep in mind the importance of human resources.
If you’re a business owner or HR leader struggling to build a solid HR department, outsourcing could be the answer to your woes. After all, studies show that 57% of business executives currently outsource HR functions. Here’s what you need to know to find success as you incorporate third-party assistance to improve your HR administration.
Signs You May Need to Outsource Your HR Tasks
Is outsourcing for you? Consider the following signs that indicate you should include outsourcing in your HR strategy.
Increased Compliance Risks
Employment laws are constantly shifting, and it can be challenging to keep up with the latest regulations at every level. If you’re having a hard time staying up to date or are seeing increases in fines or legal issues as a result of compliance errors, it could be time to reach out for help.
Recruitment and Retention Struggles
If you’re struggling to meet goals for your time-to-hire or quality of hire metrics, outsourcing your hiring tasks to a third party can help. Outsourcing could also be the answer to low employee morale, disengagement, and even increased turnover, as more efficient processes can improve all of these key performance indicators.
Inefficient or Non-Existent Systems
Is your team relying on spreadsheets and emails to keep things organized? If you don’t have policies, procedures, and systems in place, it’s likely a sign that your HR team doesn’t have time to think strategically. This can easily lead to an overwhelmed and overworked team, especially as the business grows.
Why Outsource? The Impacts of Inefficient HR Administration
Inefficient HR administration doesn’t just impact the HR department; it can have negative ripple effects throughout the organization.
Lower Morale and Engagement
Cumbersome processes and unresolved issues can often put undue stress on employees. This frustration can lead them to disengage from their work and start feeling like the company doesn’t care about their needs.
Higher Turnover
When employees don’t feel supported to do their best work, they may leave the company. Gallup data shows that half of today’s employees are open to leaving their current jobs. Unfortunately, high turnover costs U.S. businesses a collective $1 billion per year, not to mention the time wasted on hiring and training employees who don’t stay.
Less Time for Strategic Work
Without efficient processes and procedures, it’s easy to waste time on activities that may be necessary but don’t bring any real return on investment. Outsourcing to make your HR department more efficient gives your team more space for the strategic work that truly brings results.
Negative Impacts on Profitability
According to data from Gallup, increased engagement can produce as much as a 10% increase in customer loyalty and a 23% increase in overall business profitability. If your inefficient HR practices are bringing employee engagement down, it can cause your company to lose out on customers and revenue, ultimately impacting your bottom line.
Which HR Functions Should You Consider Outsourcing?
Business and HR leaders report spending an average of 21 days per year on payroll functions alone. This is one task that can easily be outsourced to a third party to create more room in the schedule for strategic work. However, it’s not the only administrative burden you can offload. You can also consider outsourcing:
- Benefits Administration: Distributing plan information, enrolling employees, and answering questions
- Recruitment and Hiring: Writing and posting job descriptions, sourcing and screening candidates, and onboarding new employees
- Compliance and Risk Management: Ensuring policies and processes are in line with the latest federal, state, and local employment laws
- Training and Development: Designing and implementing training programs and managing the performance review process
- Employee Relations: Mediating employee conflicts and conducting investigations
Outsourcing these functions can ensure your HR department runs smoothly to produce the best possible ROI.
AssetHR Outsourcing Can Transform Your HR Function
Outsourcing has the power to take your HR department from good to great. At AssetHR, we provide a full suite of services to help you reach that goal. From payroll management to recruiting, compliance, and leadership development, our team has the know-how to build efficient HR departments that increase engagement and retention, improve culture, and boost your bottom line. Contact us today to see how we can help.