Human Resources Departments Contracting Out Some Essential

¶ … Human Resources departments contracting out some essential services to outside organizations?

The nature of business today is much more competitive than ever before. An increasing number of companies are investigating outsourcing HR functions. There are many commonly mentioned advantages of contracting out some or all of your HR functions. These include: increases in efficiency, reducing corporate costs, and, if you are only outsourcing a few functions, giving time to your in-house employees to focus on your core HR mission and values rather than being constantly bogged down in paperwork, etc. Companies choose to outsource for both financial and non-financial reasons. Outsourcing can enable the company to gain access to world-class technologies and capabilities they cannot afford on their own. It can also allow the company to, by saying money in-house, get access to an infusion of cash or free up other resources, improve company-wide focus, and reduce risk. In an IPA survey, panel members also mentioned a desire to gain access to a standardized menu of services that have proven their worth and an ability to expand program offerings.

2. The first step when considering outsourcing HR functions is getting a fundamental understanding of your own operations as they are. Doing a detailed analysis of the department's functions and inefficiencies can help pinpoint where the best value can be derived from outsourcing. The focus when outsourcing is to keep core activities in-house and outsource non-core activities only. Outsourcing core activities could have the consequence of shifting the company's focus away from its guiding vision and mission. The hope is that by shifting responsibility for some of these functions to an external service provider, employees will have more time to focus on core activities and help the company gain competitive advantages. Generally speaking, there is little reason to outsource if contracting out the function incurs more time and money than keeping the activity in-house. One of the reasons HR activities are often considered for outsourcing is that these functions typically include such non-core duties as employee benefits administration, staffing, training, and relocation. Companies should also consider outsourcing individual activities rather than the duties of an entire department. Employee benefits and payroll could be outsourced, for example, but training and relocation services handled by HR staff.

2) As the Manager of Human Resources you are asked to prepare a report on costs in your area. What will those costs consist of...

1. Costs in the HR department are in several different areas. In a recent survey by Hewlitt Associates, 75% of HR leaders report that they are under pressure to reduce costs. The first step is to establish a solid baseline -- even if taking full stock unearths hidden costs. True costs may be higher than additionally though. In addition to the costs normally associated with running an HR department, including HR staff salary and benefits, costs for recruiting and training new employees, and cost involved when an employee separates from the company. Many organizations underestimate the costs of HR, sometimes by as much as 50%.The hidden costs often include decentralized HR activities and HR technologies. Many employees outside of HR perform human resources tasks. Are these costs accounted for? Also, many of the technology charges for HR get charged to IT, turning into hidden costs. Any complete cost report for an HR department must include all of the costs listed above.