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HR Outsourcing: The Pros and Cons

With the state of the current economic climate, businesses have been forced to make crucial budget cuts. Human resources, as well as other departments, have experienced a decrease in the number of staff members or have been eliminated altogether. With far fewer resources, the remaining staff members are left with the responsibility to manage the workload previously done by many more employees.

The Human Resource (HR) department is at the heart of every organization. It is essential that the HR Department be run efficiently and effectively, even with limited resources.  To ensure that the HR department tasks are carried out, many business owners have begun to outsource some or all of the departments function to provide HR services and data, including compensation surveys.

When considering outsourcing the human resources department, consider the following advantages and disadvantages:

Advantages

Savings: Businesses will pay far less for outsourced services than they would on a dedicated employee fulfilling the HR role. Many of the companies offering HR services only charge for the services that the business uses. For example, a business owner will accumulate savings by paying for recruiting services on a case by case basis rather than providing a full-time recruiter’s salary.

Efficiency: Upon outsourcing the HR tasks, businesses are able to use their limited resources to focus on building and expanding internal operations. The cost savings allow businesses to allocate funds to other departments, increasing marketplace competitiveness. Additionally, providing the HR department with wage, salary and compensation surveys will increase the effectiveness of operational decision making.

Process: HR outsourcing companies offer a great deal of expertise on the HR industry and are able to implement processes that are efficient while falling within all legal regulations. After thoroughly analyzing a business and its structure, outsourcing companies are able to recommend standardized processes, such as training, hiring and retaining employees.

Disadvantages

Expertise: An internal HR department is a valuable asset for businesses. Without one, there is no central hub of expertise with information on employee training and business operation processes. Each business operates uniquely, so it may be difficult for an outside company to understand how alterations in processes can affect employees.

Cultural: Without an internal HR department, employees lose the personal connection of working directly with the team that sets corporate policies, provides training, and manages payroll. This may lead to feelings of resentment that the outside HR team does not have the employees best interest at heart. Employees appreciate the sense of security in having an in-house HR team, who are there to serve them, a feeling that is difficult to recreate when outsourcing HR functions.

In order to achieve operational effectiveness, businesses must provide HR departments, outsourced or internal, with the proper resources, such as wage or compensation surveys, to make decisions that are beneficial to the organization and its employees. WageWatch provides wage, salary and compensation surveys and reports, with data from over 108 markets. With this information, HR departments are able to compare data across national, regional, state, city or property. To learn more about compensation surveys, please call 480-237-6130 or contact us online.

This entry was posted on Wednesday, November 7th, 2012 at 11:00 AM and is filed under Benefits & Compensation. You can follow any responses to this entry through the RSS 2.0 feed. Comments are currently closed, but you can trackback from your own site.

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