When it comes to human resources, companies have a choice: handle the department in-house or outsource it to a third-party provider. While there are benefits to both options, outsourcing HR through a shared services model offers several advantages that can’t be found in-house.
Here are some of the primary advantages of using HR shared services.
Improved efficiency
When you outsource your HR functions, you can take advantage of the provider’s economies of scale. This means that your provider can perform tasks more efficiently and at a lower cost than your company could on its own.
For example, let’s say you need to process a large number of employee expense reports. An in-house HR team would likely take longer to process the reports than a shared services provider with a dedicated expense processing team.
On the other hand, a shared services provider can also spread the cost of investments in HR technology across all of its clients. This allows you to take advantage of the latest HR technology without having to make a significant upfront investment. And with a shared service center, you only pay for the services you use, which can save you money compared to an in-house HR department. This is one of the advantages of shared services that can have a direct impact on your company’s bottom line.
Improved compliance with employment laws
With ever-changing employment laws, it can be difficult for companies to keep up with the latest requirements. When you outsource your HR department, you can rest assured that your provider is up-to-date on all the latest compliance issues. This can save your company from costly penalties and fines.
Additionally, many HR shared services providers offer compliance training for employees. This can help reduce the risk of non-compliance issues in the future.
There are also compliance risks specific to certain industries. For example, if your company is in the healthcare industry, you need to be aware of the compliance requirements under the Health Insurance Portability and Accountability Act (HIPAA). A shared services provider with experience in your industry can help you navigate these compliance risks.
Greater focus on strategic initiatives
When you outsource your HR functions, you can free up your in-house team to focus on more strategic initiatives. For example, if your in-house HR team spends a significant amount of time processing payroll, they may not have enough time to focus on developing employee retention programs.
By outsourcing HR functions like payroll, your in-house team can focus on initiatives that will have a more direct impact on your company’s bottom line. You can also free up your company’s resources to focus on its core business. Rather than spending time on HR tasks, your company can focus on developing new products, expanding into new markets, or improving customer service.
In addition, when you outsource your HR department, you can take advantage of the provider’s knowledge and expertise. This can help your company make more informed decisions about strategic initiatives.
Lower costs
Outsourcing your HR department can save your company money in several ways. First, you won’t have to pay for the overhead costs associated with maintaining an in-house HR department, such as rent, utilities, and office supplies.
You also won’t have to pay for employee benefits, such as health insurance and retirement plans. Additionally, you may be able to negotiate a lower rate with your HR shared services provider than you would if you hired an in-house HR team.
Improved employee satisfaction and retention
For example, if your employees are unhappy with the company’s health insurance plan, they may be more likely to leave the company. However, if you outsource your HR department, you can offer your employees a wider range of benefits options. Or, if you have a limited budget for employee benefits, a shared services provider can help you find the most cost-effective options.
Offering a comprehensive benefits package can help improve employee satisfaction and retention. One study found that employees who are satisfied with their benefits are more likely to stay with their company.
A shared services provider can also help you develop and implement employee retention programs. By outsourcing your HR department, you can take advantage of the provider’s expertise and knowledge to develop retention programs that will work for your company.
On the other hand, employees who are satisfied with their HR department are more likely to be satisfied with their job. This, in turn, can lead to improved customer satisfaction. Satisfied employees are more likely to provide excellent customer service and go the extra mile to help them.
Improved quality of service
When you outsource your HR department, you can expect to receive a higher quality of service. This is because HR shared services providers are experts in their field and have the resources to provide a high level of service.
For example, if you have an employee who is having difficulty with their health insurance benefits, a shared services representative can help resolve the issue. Or, if you need to update your employee handbook, a shared services provider can help you create a new handbook that meets your company’s needs.
In addition, HR shared services providers have access to the latest technology. This means they can offer a more efficient and effective service than an in-house HR team.
Greater flexibility
Another advantage of HR shared services is that they offer greater flexibility. For example, if your company is experiencing a period of growth, you can scale up your HR services to meet the needs of your growing company. This is usually a more cost-effective option than hiring an in-house HR team.
On the other hand, if your company is experiencing a period of slowdown, you can scale back your HR services. This can not only help you save money on your HR budget, but it can also help you avoid layoffs.
Additionally, if your company is acquired or merged, you can easily transition your HR services to the new company. You just need to notify your HR shared services provider of the change and they will take care of the rest.
There are many advantages of HR shared services. By outsourcing your HR department, you can save money, improve employee satisfaction and retention, receive a higher quality of service, and enjoy greater flexibility.
There are several HR shared services providers to choose from, so be sure to do your research to find the best provider for your company.