hr outsourcing and

8/8/2019 HR Outsourcing And

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HR outsourcing and employee satisfactionMany organisations realise that shared service centres cannot replace theirHR presence on the floor and the scope of HR outsourcing is, thus, evolvingrapidly. Firms need someone to constantly communicate with theiremployees even as they navigate through the various HR systems. MoreIndian organisations may actually emerge with an HR outsourcing modelwhich is a lot more humane and a lot less cost-driven.

Ganesh Chella

There is much delight among global HR Outsourcing (HRO) firms given thatthe global HRO business is expected to reach a staggering $100 billion by theend of this year and the growth trend continues to look robust.

While I am hearing a lot about costs being saved, very little is being spoken

about what employees have to say about their satisfaction. I really wish wecould get to hear more about this.

Fortunately, we do not have to try too hard to understand this. Given thatmost HR outsourcing arrangements are based on a service delivery modeleither through a centralised shared services model or a partial outsourcingmodel (Global Services, quoting Benchmarkreports.com) it is possible topredict this from some of the research and insights relating to the servicedelivery models for external customers.

HRO is an integral part of the BPO industry and its scope is rapidly evolving

to include areas such as payroll, benefits administration, training, recruiting,performance management, compensation management and so on.Employees typically get support through the Web, mail, phone and a limitedamount of face-to-face interactions.

Complete HR outsourcing is difficult and, when, attempted is likely to

impact the employees every day experience of working in theorganisation and, therefore, lead to poor satisfaction.

The reasons

HR outsourcing tends to under-deliver on the people interactiondimension of the employee value proposition.

In his book, We are all in Services now, Professor James Teboul defines valueproposition as the benefits offered by the company as they are perceived byits customers in relation to competitive offerings. He has defined five key elements constituting the value proposition.

Three of these five elements are extremely relevant when applied to anemployee context:


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the process interaction which defines how easy or difficult it is for theemployee to interact with the organisation to get things done;

the people interaction or the extent of empathy, attentiveness,consideration, responsiveness employees get in their interaction and the

extent to which the accumulated knowledge about the employee is reflectedin the quality of the in teractions and the extent to which his interactions areenlightening and fulfilling;

credibility ofresults and reliability or the assurance that things will work aspromised and that someone will intervene to fix it if it does not.

HR outsourcing firms depend on their ability to convert every HR need into awell-defined process and the resultant set of rules and steps to make itscaleable and standardised.

What is of concern is the over-dependence on the process interactiondimension at the cost of neglecting the people interaction dimension.

To me the difference between a credit-card customer and an employee is thefact that employees expect to be treated as integral members of theorganisation with unique needs, aspirations and problems and count on theorganisation and the HR professionals to use their accumulated knowledgeabout them to solve their problems well and with consideration andflexibility.

For the organisation, each interaction is meant to be an opportunity to sellthe organisations value proposition, clarify its policies and practices, deliverkey messages and develop an accumulated body of insight about what is onthe employees mind. Most important, the interactions are greatopportunities to reinforce the organisations commitment to the employeesneeds and expectations.

By defining these interactions as mere transactions, processes and servicelevel agreements (SLAs) that can be outsourced, organisations are likely tolose out on delivering the empathy, attentiveness, respect, willingness tohelp, and a certain amount of grace and unity in the relationship that

employees want. In fact, the problem becomes acute when things go wrong.The service recovery process is quite often messy and complicated.

HR operations cannot be separated from HR strategy

One of the key arguments in favour of HR outsourcing is that by outsourcingthe operational aspects, HR professionals will be freed up to engage in morestrategic issues. This is far from true. Many of the employees problems donot present themselves in neat and discrete operational packets. Thesolutions to many issues are quite complex and often require the

involvement of one or more managers, assessment of the potential impact ofdecisions on peers, judgment about making exceptions based on special


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considerations and so on. Quite often, insights to shape new policy emergefrom a deep understanding of operational issues and implementationrealities. Business leaders refuse to engage with HR on strategic issuesunless some of their burning operational issues are addressed. Theseparation of HR operations from HR strategy is, therefore, untenable.

HR outsourcing cannot replace HR presence

Many Indian organisations realise that shared service centres cannot replacetheir HR presence on the floor. If the current trends are any indication, therehas been a huge surge in the demand for HR professionals. The HR-to-employee ratio is not falling and is, in fact, being debated constantly.Organisations are realising that they need someone to constantly engagewith their employees to communicate the value proposition, clarify theirunderstanding of the same, support them even as they navigate through thevarious HR systems and processes, solve their problems and demonstrate tothem that they matter.

In fact, the organisations with high engagement scores are the ones withempathetic presence and not excellent processes.

This trend is welcome and I believe that more and more Indian organisationsmay actually emerge with an HR outsourcing model which is a lot morehumane and a lot less cost-driven. As the preferred destination to addressthe worlds outsourcing needs, may be India will show the way!

(The author is the founder and CEO of totus consulting, a strategic HRConsulting firm. He is also the co-founder of the Executive and Business

Coaching Foundation India Ltd. He can be reached at

[email protected])

HR OutsourcingA business that utilizes HR outsourcing assigns the management of all functionsrelative to the human resources needs of the business to a third party provider who

specializes in the management of human resources. HR Outsourcing is typically viewed

as a cost effective method of managing all or a portion of the human resources related

operations of a particular business.

1. HR Outsourcing Overview

2. Considering HR Outsourcing

3. Should You Consider HR Outsourcing?
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4. Functions You Should Consider For HR Outsourcing

5. Finding an HR Outsourcing Firm Right For You

6. Interviewing Your HR Outsourcing Firm

7. Increase Efficiency

8. Drawbacks

9. Increasing Employee Satisfaction

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1. HR Outsourcing OverviewThe term and concept of `outsourcing' became popular during the increased economic

and corporate growth of the 1980's. Outsourcing presents the opportunity for an

existing business to delegate specific tasks associated with a particular business

function or departmental functions within their organization to an external entity that

specializes in the management of those particular functions. For example, if a

business was to consider the outsourcing of the functions and responsibilities relative

to the human resources needs and requirements of that business, they would seek to

hire an individual or outsourcing firm that specializes in the operations of the many

functions of a human resources department. These include employee benefits

administration and maintenance, payroll, recruitment and termination related

processes and procedures, and employee training and development programs. The HR

outsourcing firm or individual would then be assigned the management of the

particular human resources needs of the company and paid a fee for their services.

Those who provide outsourcing services are subcontracted, not employees of the

company to which they provide their services.

A large number of smaller businesses that experience rapid growth will consider HR

outsourcing as a viable alternative to hiring internal staff to accomplish the tasks

associated with the human resources needs of the business. HR outsourcing can often

help to fulfill the strategic goals of the business to reduce costs and allow for the

current staff's skill sets, experience and energy to be strategically directed towards

the aspects and functions of the business at which they are most effective. This makes
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the staff able to pursue those tasks that will be most profitable for the business as a

whole.

For HR Outsourcing Call 800-743-9439

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2. Considering HR OutsourcingDifferent businesses have different human resources needs depending upon the size

and scope of the business and how comfortable the executives are relinquishing some

of the functions of the business to a third party. There is a large assortment of HR

outsourcing firms that will meet the needs of a variety of businesses. While some HR

outsourcing firms provide a wide variety of human resources related services, others

may specialize on just a portion of HR functions, such as recruiting or payroll

administration. It is possible and quite common for a business to outsource all or just aportion of the hr functions of the company to a human resources outsourcing firm.

Those businesses that outsource HR tend to be small to mid sized firms with a number

of employees ranging from 10 to 1500. For these businesses, HR outsourcing is utilized

as a strategic approach to relieve their internal staff of hr related responsibilities and

focus on the core operations of the business. In outsourcing, the functions of the HR

department, the firm can access the experience and knowledge of hr professionals to

improve employee relations, ensure regulatory compliance, and help to manage and

reduce operating costs.


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3. Should You Consider HR Outsourcing?A small or mid sized business in the midst of rapid expansion is rarely prepared to

handle their increasing HR needs. Although human resources related tasks and

functions will increase as the business grows, the HR requirements associated with the

business might not quite seem to warrant the hiring or the salary of an internal staffmember to manage their human resources functions. HR Outsourcing presents the

alternative of effectively managing human resources related functions in a cost

effective manner. This enables the business to access professional advice and

assistance with a concentrated focus on dedication to HR accuracy and can also help

to improve employee relations.

An HR Outsourcing firm can save small to mid size companies money by allowing the

business owners the time to concentrate on the daily operations and strategic goals of

the core business as opposed to using that time to manage human resources functions.

Professional HR Outsourcing firms are often intimately familiar with the most costeffective employee benefit programs, such as less-expensive health insurance and
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401k programs, and will be able to present a variety of plans to accommodate the

needs of your employees that adhere to the company's budgetary guidelines. HR

Outsourcing also connects the business to an expert in the area of conflict

management and payroll.



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4. Functions You Should Consider For HR OutsourcingIf you and your staff do not seem to have the time or the proper resources to manage

human resources related tasks, you may want to consider outsourcing some or all of

the HR related functions of your business. There are many HR functions that can be

professionally administered and managed on behalf of your company by a professional

HR Outsourcing firm including payroll administration, employee benefits and riskmanagement. However, you must feel comfortable with an outsider managing your

human resources functions. If you do not have adequate resources to manage your HR

needs and are comfortable with both the cost of an HR Outsourcing firm and their

managing your HR functions, you may want to consider an HR Outsourcing firm to

fulfill the HR needs of your company.

If you hire an HR Outsourcing firm to handle payroll administration, you can expect

them to accurately produce checks, deal with holiday, track sick and vacation pay,

and handle taxes. Hiring a HR Outsourcing firm can also provide access to the

experience of these professionals in the area of employee benefits, HR managementincluding hiring and firing and risk management functions including worker's

compensation and employee safety policies and procedures. Often, HR outsourcing is

simply more economical than learning about all of these items on your own.



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5. Finding an HR Outsourcing Firm Right For YouOnce you have decided that you need an HR Outsourcing firm to administer andmanage the human resources functions of your company, you will need to determine

which human resources functions you would like to outsource or if you want the HR

Outsourcing firm to manage all activities and responsibilities associated with your

human resources department. An HR Outsourcing firm can be hired to assume full

responsibility of your company's human resources administration and can also assume

full legal responsibility of your entire staff in regards to hiring, firing and wages. Other

HR Outsourcing firms may offer only specialized professional HR services such as

payroll administration or recruiting.

One service that can be obtained from an HR Outsourcing firm either individually or all


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inclusively as part of the overall management of a human resources department

includes payroll administration. An HR Outsourcing firm can produce checks, deal with

sick time and vacation time, and handle taxes. If payroll is one of the functions

managed by an HR Outsourcing firm, the firm will be responsible for keeping up to

date with the requirements of federal tax laws, which makes the HR Outsourcing firm

or human resources department of any business a critical component to the regulatory

compliance and overall success of the business.



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6. Interviewing Your HR Outsourcing FirmThere are many things to consider as you begin the process of finding an HR

Outsourcing firm to accommodate the human resources needs of your company.Although you will inherently be considering the cost factor heavily, you should also be

considering a cultural fit and one that fits your corporate image. The HR Outsourcing

firm you ultimately choose to work with should clearly understand the priorities and

values of your company.

You should also be questioning any hr outsourcing firm you might be considering hiring

about their range of services and how those services are delivered. Some HR

Outsourcing firms are exclusively web based, while others are a combination of

internet and personal services. You will want to evaluate the flexibility of all contracts

as well as the HR Outsourcing firm's available resources. A great deal of informationregarding the HR Outsourcing firms expertise and general experience can be obtained

from the firm itself and by requesting professional references from the HR Outsourcing

firm. Contacting a professional reference that can discuss with you, on a business to

business level, the reputation and capabilities of the HR Outsourcing firm as they were

applied to their business can provide valuable information to be considered in your

own HR Outsourcing firm decision.


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7. Increase EfficiencyA company that handles all aspects of the entire business internally have much higher

payroll, research, development, distribution, and marketing expenses, all of which are

passed along to their customers. Your company can gain the expertise of an HR

Outsourcing firm's cost structure and economy of scale and give your company an

important competitive advantage. Having the expertise of an HR Outsourcing firm can

also help reduce your company's labor costs by utilizing the human resources related

services of the HR outsourcing firm to focus on the recruitment and hiring process forlong or short term employment. An HR Outsourcing firm should also be able to


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understand any project or short term employment needs of the company on a level

that will enable them to evaluate current internal staff as candidates for projects as

they arise.

A good HR Outsourcing firm will have the right resources to be made aware of your

staffing needs and respond quickly. The time it to takes to hire, train and provide the

initial support requirements of a new staff member is typically much less when

performed by an HR Outsourcing firm as opposed to in house management of this

particular human resources function. So the answer is yes, HR Outsourcing can

increase efficiency.



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8. DrawbacksAlthough there are many benefits to HR Outsourcing, there can be a down side to HR

Outsourcing as well. Some of the tasks that an HR manager on staff and in house may

be better at accomplishing than an HR outsourcing firm can include recognizing

employees birthdays, building employee incentive programs, and managing disputes

between co-workers. These are the types of functions that are more easily achieved

when there is daily interaction between an HR manager and the rest of the staff.

If you choose to have an HR Outsourcing firm take on the full legal responsibilities

associated with hiring and firing, you will have to be completely ready to relinquishcontrol of this aspect of the business in exchange for not having to shoulder the stress

or take the time to deal with the various functions associated with hiring and firing.

Although it might initially sound very appealing to let go of all those staffing concerns,

this is something worth heavy consideration before you let go. For those HR

Outsourcing firms that are solely or partially a web based services provider, there are

risks associated with internet security and functionality in general such as consistent

connectivity, reliability of the site and the security of sensitive human resources

related data.



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9. Increasing Employee SatisfactionThere are several ways that HR Outsourcing can increase employee satisfaction as well

as provide a cost effective service to your company. A good HR Outsourcing firm will

have the knowledge and expertise to present alternative and additional employee

benefits that go a long way towards keeping employees happy and satisfied and cost

your company little to offer. Some of the additional benefits that can be administeredby an HR Outsourcing firm include negotiating with national and local businesses to


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provide an employee discount program for your employees and lunch time learning

seminars. Many vendors and speakers are happy to come out at no cost to speak to

employees and will often provide lunch for a specific number of employees in

attendance. In addition to proper administration and management of HR to help to

ensure employee satisfaction, an HR Outsourcing firm can be hired to be responsible

for making sure they keep up to date with the requirements of federal tax laws, which

is critical to both the business and the employee, yet can be complicated to manage

for those who are not experts in the field.

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