|
Outsourcing of the human resource departments around the country is a phenomenon that appears to be growing. Some HR functions can be easily outsourced while others cannot without lots of headache and future cost. The key to remember is that organizations that are progressive and trying to reduce costs are more likely to have success if they hire the right HR professionals instead of outsourcing. Strong HR professionals can be creative and can reduce cost through better administration in larger companies but may not justify their salaries in smaller organizations. Consider each HR function separately before making decisions. Payroll: Payroll is that function that is necessary for any business that has employees. If your business is small consider combining the functions of payroll, purchasing and finance to reduce cost and overhead. However, payroll is one of the easiest departments to outsource. Typically costs range from $10-$30 per employee per pay period. Labor Relations: Labor and employee relations are difficult departments to outsource. The reason being that there needs to be a lot of internal knowledge about policies & procedures, culture, disciplinary procedures, or other information that would be difficult for a third party vendor to understand. Labor Relations & Employee Relations departments are typically deal with union negotiations/relations as well as solve problems that few other departments would be able to handle. Outsourcing this department is not the wisest choice. Recruiting & Hiring: Organizations can outsource this function and many times already do without being aware of it. Some organizations utilize “head hunters”, staffing agencies, and others to find them the right candidate. There is wide variability on prices that may range from a few hundred dollars for an hourly laborer to 25% of an executives first-year salary. The problem faced by outsourcing recruiting and hiring is that the company doesn’t have complete control to hire those who fit their needs the most and still must spend time screening candidates. Companies that desire to maximize their recruitment of the best employees should keep the practice “in-house”. Benefits & 401K: Benefits is like pay-roll and can be outsourced with relative ease. Much of benefits managing entail dealing with the insurance companies, answer questions, and keeping people enrolled. Outsourcing makes sense for most organizations but can be a problem if benefits costs are creeping upwards. Third part administrators are unlikely to take great caution or take actions that are going to reduce these costs. Leave of Absence: Leave of Absence can be outsourced as well. Typically the person wanting a leave contacts the third party administrator and once approved a report is sent to the company. It must be said that when we used this outsourcing at one of my employers the program didn’t work very well. The problem resulted because of poor communication between the third party administrator and the company which resulted in a “pink elephant” syndrome where numbers kept climbing. For many organizations this type of outsourcing may work for most organizations but not when you are trying to reduce the numbers and cost associated with LOA’s. Agencies are more into processes then creative reduction.
Related Articles -
business, human resource, outsourcing,
| 
