With all the tasks needed to run your startup company, overseeing employee affairs can be a challenge. And this can cause issues for your team that will affect their performance. For this, outsourcing can be a good solution. Here is how you can effectively use it to keep your human resources department going.
Why Outsource Your Startup Company HR Department
Considering how important human resources is to the performance of your startup company, you might wonder why you would want to entrust it to an outside firm. But there are several benefits here that you don’t want to miss. These will not only make work easier for you but also improve the performance of the department.
An Expert Eye On Your HR Policies
Since your HR department would still be in its early days, you might still not have a handle on employee policy making. Outsourcing can give you quick access to experts who will conduct a thorough review of your current policies. They can then refine these to better suit your team.
Mitigate Legal Risks
Another area that your HR department might have a hard time dealing with is the various legal concerns. With the expertise of outsourced agents, they can help you navigate the changing regulations and make sure your company complies. Additionally, they can help you lessen potential legal risks.
Ensuring Continued Employee Training
Conducting regular training sessions is vital for keeping your team competent. But with all the management work, this can be overlooked. An outsourced HR team can oversee this training program and ensure that your team members learn important skills. In addition, these agents can take over monitoring employee performance.
Better Employee Relations
Ultimately, outsourcing can help you improve your relationship with employees. Since these teams focus only on HR work, they can cater to employee needs at any time. They will also be able to handle these concerns faster. That gives your team a greater sense of satisfaction knowing that you have their backs.
Outsourcing Your Startup Company’s HR The Right Way
Like any outsourcing effort, sending out your startup company’s HR tasks requires careful planning. Your goal here is to ensure that the strategy integrates well with your existing HR department. As such, you need to carefully decide which functions you\’re going to outsource.
Some of the common ones that you can consider sending out are:
- Employer relations and compliance
- Payroll management
- Workers’ compensation claims
- Employee benefits processing
- Hiring process
- Screening and background checks
- Skills testing
To better weigh which exact functions you need to outsource, review your current HR capabilities. Determine which ones you are already able to manage on your own and which ones you need some help in. You would also want to anticipate any future HR needs that you might have and factor this into your list of tasks.
Selecting Your Outsourcing Partner
There are different options you can choose from for outsourcing HR tasks. Each of these options will suit a different company environment. As such, you need to know what each option has to offer and which will fit into your current needs.
- Human resources organizations: These firms are geared towards providing HR services for large companies and can field thousands of agents at the same time.
- Professional employee organizations: On the other end of the scale, these organizations cater to smaller businesses.
- Administrative service organizations: These focus on administrative duties. Aside from payroll, they can also handle legal concerns and compliance.
- Staffing and recruitment agencies: These companies can help you conduct the lengthy screening and hiring process for new employees.
- General outsourcing firms: Firms like Virtua Outsourcing Solutions provide generalized services that fill in certain HR roles.
Aside from these firms, you can also get freelance agents to fill in individual positions you need. Is not uncommon for you to use a mix of the different options depending on your need.
Assessing The Cost
One factor that has a significant impact on how your startup company implements HR outsourcing is the cost. Here, you should bear in mind that HR pricing is customized based on the number of agents and the specific services you need. This means you should have a clear idea of the scope of work you want to outsource for better cost assessment.
You can estimate the cost is by basing it on your current in-house HR employees’ salaries. The per agent cost will typically be between 4% and 8% of the salary of your employee in the same position. Note that the actual rates might be higher depending on the outsourcing firm’s level of expertise. Take a look at the current market rates to have a good idea of home much overhead you need to include.
Building Your Startup Company HR Outsourcing Agreement
Once you have partnered with a third-party HR firm, you need to develop the outsourcing agreement for it. This agreement will set the fundamental service levels that you will expect from the company.
This is also where you finalize the pricing model to be used for the duration of the contract. There are three elements that you should incorporate here.
- Predictability: There is a clear and quantifiable range of prices for all services to be done.
- Efficiency: There should be an incentive for the provider to drive down costs.
- Competitiveness: The pricing model must remain viable throughout the contract.
Note that these elements are not static. They will still likely change as your business evolves. As such, you should provide some degree of flexibility in these terms.
Making The Transition For Your Startup Company
Properly transitioning the outsourced HR team into the work is crucial for more effective implementation. For this, you need to accomplish the following phases:
- Moving responsibilities from your organization to the outsourcing firm
- Moving processes to the firm
- Changing the work environment to a more improved one.
These stages can happen in different ways. Creating a dedicated transition management team will help you monitor each and properly coordinate them.
It is also essential that you carry out the transition without disrupting your HR department’s overall work. Here, it would be a good idea to do it in sections built around your team\’s work schedule. You should also establish clear guidelines for employees to ensure that they can deliver the expected results during the transition.
Keep Your Startup Company Going With HR Outsourcing
With the right preparations, you can expand your startup company HR department through outsourcing. But don’t think of this as one-off work. To get the most out of it, you need to have the right long-term partner. Contact us and we will help you help your employees do their work.