Monday, February 22, 2010

Signs for Outsourcing your Human Resources Department

My HR processes were running well and I wasn’t facing any problems. How many times have we heard of such statements? Believe it or not, there comes a time in the life of most successful business when they have to decide if they run a process well internally or should a HRO (Human Resource Outsourcer) may be called in. It’s tough to make the right decision at the right time to ensure smooth processes. Team Drishti looks at a few telltale signs that can be termed as pointers for “let’s pull the trigger“:

Costs: Cost is the most important factor due to which companies opt for HRO. A detailed analysis of costs in payroll, benefit management and other key areas continue to be the drivers primarily responsible for HR outsourcing. However, companies tend to compare with their competitors/others only on cost factor and fall in the trap of hasty decisions. While costing is extremely important and critical it is imperative that a detailed analysis on efficiency, quality, speed of closure etc. as motivational factors be done before deciding of hiring a HRO.
Missed Deadlines: If a growing number of employees are complaining that critical documents, ranging from pay checks to HR MIS reports to almost anything else , are arriving late, it's a sign that something is broken. There's a good chance that the delays are being caused by an HR department that's stretched beyond its capabilities. However, it again makes sense to first analyse the entire process with the quality team, run a why-why analysis or a six-sigma quality approach before calling for an HRP. However, an HRO can step in and help get critical work back on schedule without the need to hire new HR employees or upgrade facilities.
System Overloads: When Relix Technologies launched their e-PMS, they realised in afewmonths time that it added a lot of load on their current internal IT Resources. They decided to call in for a HRO. Whenever your HR tasks begin to overwhelm internal IT resources, like Relix, you should realise that it’s time to either invest in additional technology or turn at least some of the crippling workload over to a third party. As HROs bring with them their own IT systems, enabling in-house systems to focus on non-HR-related tasks, it is advised that one should go for a HRO.
However, a cost/benefit analysis may be done to evaluate if it would be cheaper for the business to shift data-intensive and high-priority HR resources, such as employee databases and Web self-service operation, to an HRO rather than invest in new on-site technology.
Increasing Mistakes: If you consistently start finding mistakes in your payroll like an extra cut in the food bill or travel reimbursement, it is time to sit and think. We all know that no HR department is foolproof, but snowballing goofs are another sure sign that people and systems are being stretched beyond their limits. Assigning mistake-prone work to an HRO can lower the pressure on in-house staffers and you get an added advantage of holding PRO accountable for supplying a basic level of accuracy in whatever work it handles. This is especially important in situations such as payroll where legal compliance is an issue.
Poor Quality Work:  Mediocre or worse output over an extended period of time is a sign that an HR department is being overworked. In the current scenario where organizations are always looking to expand with tough recruitment policies this can be a very important issue. The fall out of this situation generally is that the organization tries to experiment with new work procedures, job distributions etc. They fail to recognise that this affects the credibility of the department and leads to disengaged employees both in HR department and the customers of HR department. it may be simpler to just outsource everything to a third party, either permanently or while a new HR department is being assembled.
Disgruntled HR Workers: Employee griping is as common as office football pools. But when the complaining begins drowning out normal discourse, it's time to start considering remedial action. An HRO can step in during busy seasons to take on the extra time-consuming tasks that drive up HR workloads and staff discontentment.

Competitors' Moves: Are many of your business' prime competitors shifting to HROs? If so, they might have spotted a need that you may not have yet detected or have been unwilling to acknowledge. Ask around and find out what benefits your rivals are gaining from outsourcing HR work. You may discover that these same issues apply to your organization.

Hiring a HRO may be the simples of tasks and so is finding the reason for it. However, what is difficult is to sit and do in-depth analysis to find out if hiring a HRO is the best option.