First published on Thursday, August 29, 2024
Last updated on Thursday, August 29, 2024
Human resources almost always has an air of confusion surrounding it, and for new employers looking to grow their business by hiring staff, the term HR alone may seem alien and irrelevant.
The fact of the matter is though, if you’re a growing business with at least one employee, you’ll need HR processes and policies in place to manage your people.
At its core, that is what HR means. It’s the function of your business that deals with hiring, onboarding, general administration, and training of your team.
Many small business owners don’t have the time to manage this on their own, so as a solution, they look to hire a human resources specialist in the area to take the load off.
Before we get into the nitty-gritty of whether or not you should outsource HR for your business, let’s look at the list of activities and responsibilities that fall under the “human resources” umbrella.
What activities does HR cover?
HR isn’t just a lofty term or an optional process, it’s a critical function for a healthy business to operate effectively.
It’s responsible for everything to do with people management, and can include:
Managing and utilising all your people effectively.
Linking performance appraisals and compensation to competencies.
Managing and applying the correct pay and award to employees.
Managing the process of finding, hiring, and onboarding new employees.
Managing all your documentation including offer letters, employment contracts, letters of warning, and storing them securely so you can access them as needed.
Advising staff on their rights and helping to resolve conflicts that may arise.
Executing fair and compliant performance management processes.
Negotiating benefits and ensuring employees receive the correct pay, penalty rates, and commissions.
Shortlist, interview, and send offers to employees.
And the list goes on…
In short, no business can grow and scale without effective people management processes and procedures. And because HR is the heart of people management, it by default becomes the engine behind your business growth.
Without further ado, let’s get into the pros and cons of outsourced HR specialists.
Pros of outsourced HR solutions
Having robust human resources and outsourcing solutions on their side has many benefits for business owners who are already juggling several responsibilities.
Outsourcing crucial HR services to an expert can help business owners get some time back in their day, and gives them assurance that the advice they’re getting is compliant with the law.
The benefits:
HR specialists can help you find, hire, and retain top employees.
Outsourced HR helps you remain compliant and mitigates the risk of litigation and employee claims.
Outsourced services provide frameworks and the foundation to help you train and develop your staff.
Providing support for the management of your staff keeps them happy and gives them confidence in your business.
HR specialists can also help you navigate the employee performance management and conflict resolution space in a fair and compliant way.
It saves you time hiring and interviewing new potential staff.
Cons of outsourced HR for a small business
Before you google “HR consultant near me”, there are some very real downsides to outsourcing HR for a small business.
When it comes to running a business, you’re probably well-versed in the fact that there is never a one-size-fits-all approach to success.
The main disadvantages you may encounter if you choose to outsource HR are:
High costs. An experienced HR consultant could cost you anywhere from $2,000 a day, to $250 an hour.
Loss of control in your business. You’ll need to ensure you define clear responsibilities for any external teams in your business if choosing to outsource your processes.
HR experts aren’t work health & safety experts. So, outsourcing your HR services only provides you with 50% of your business needs and legal obligations.
Data security and protection. You’ll need to be confident that your HR specialist is storing your business’ data and private information securely and privately.
Ensuring quality of services. You’ll need to hire an experienced adviser who provides quality advice at all times to avoid breaching the law and being vulnerable to employee claims.
Effective vendor management. If you’re time-poor, outsourcing parts of your business can be as time-consuming as managing it yourself if you need to support your external provider with a lot of time and information for them to be effective.
If you’re torn between what the best course of action may be, we have an alternative that could be the ideal solution for you. Read on to see what it is…
The best alternatives to outsourced HR services
Did you know that software can help you halve the number of hours you spend on HR admin?
It’s true. And it’s the principle that guides how we create and offer our software solutions here at BrightHR. We help to boost the advantages, and reduce the potential negatives of outsourcing HR, and here’s how.
Software is more affordable
HR software is one of the most affordable ways to store and manage employee information, automate your hiring and onboarding processes, and track and gain visibility into rosters and leave.
Automate your people management
Still unsure about automation? Ask yourself how much time you spend on repetitive employee management tasks. Are you confident you’re paying them correctly? Are you sure you’re managing them in a compliant way?
If any of these questions have you second-guessing your process, it may be time to use HR software to help ease this burden.
Track leave automatically
Australia has some of the most complex leave processes in the world.
A typical Australian employee accrues their leave balance, different employment types have different leave rules and entitlements. And to add to this, the modern award and classifications system can be notoriously difficult to navigate.
The right software solution will help you navigate it all seamlessly while giving you access to HR advisers who can answer all your employment relations questions.
Pay workers correctly
Are you spending your weekend calculating the right pay every payroll run?
This is one of the most daunting processes for new business owners in Australia. There are 121 modern awards to apply to different industries and occupations. If you’re not sure you’re getting this right, you could be leaving yourself vulnerable to expensive legal risks.
HR software can help you stay on top of your payroll reporting, reach HR expertise, and alleviate the stress of potential mistakes.
Keep workers safe
If you work in an industry with steep workplace health and safety regulations and rules, then a software platform that helps you mitigate workplace incidents is invaluable.
With software, you can be alerted to incidents when they occur, manage your risk assessment process, and report incidents and near misses instantly.
Want to get started with award-winning software?
There are a range of options for you to start using BrightHR’s software.
You can book in time with our team of software experts for a customised tour of the software and a quote. Or try out our Payback Calculator to find out just how much time and money HR software can help you save.
