One of the major challenges facing startups today is properly managing and serving the needs of a rapidly growing workforce. The last thing you want slowing you down as an entrepreneur is a cumbersome HR department. Regrettably, HR has the ability to sink a startup faster than virtually anything else for reasons that range from wrongful termination, harassment, discrimination and violation of payday laws.
For example, many early stage companies fail to develop a core asset to their internal HR department: the Employee Handbook. With employee disputes, litigation processes can often cost companies upwards of $50,000 win or lose. “I didn’t know” is not an excuse in court. The Employee Handbook is a critical tool in protecting your business. Having an effective handbook in place can help keep your company out of court, while also improving internal ops, motivating employees, and establishing clear communication between employer/employee.
This prompts us to outsource. Outsourcing is when a company hires another company to perform some of its functions. The two primary reasons a company will opt to outsource are cost and skill set. In short this means that the third party outsourcing company is offering to provide the required work at either a significantly lower cost or will provide higher quality work or possibly both of these requirements. Sometimes time also plays a huge factor since most outsourcing companies can get the job done faster.
If you are a startup company it is advisable to outsource most or all of your HR functions. A start-up company with 3 employees has been equated with well established company with more than 50,000 employees when it comes to employment law.
With an increasing number of new laws regulating employment cropping up through the years, it is important to recognize that HR is not your core competency as a startup company and instead let specialists manage your employees. This will allow you concentrate more on your core competencies since time, resources, or expertise may not be in abundance. The specialists bring in fresh viewpoints, tried and tested processes as well as competent policies that help in the management of employees. This in turn saves a lot of time and effort on the part of the management and additionally in the standardization of HR processes.
Apart from expertise that comes with outsourcing, you also get access to the most recent or up to date technology without having to make costly investments. If you are a startup company you may not have many of these infrastructures.
Outsourcing your HR department can be an effective strategy, but it is dependent on the amount of knowledge acquired on when and what to outsource. A lot of successful outsourcing groups offer cost savings, effective and efficient service as well as standardization of processes. You should not only associate HR outsourcing with recruitment but also for operational, administrative, and strategic functions.
At BayPoint we’ve developed a way to provide our clients with the tools and support of an outsourced HR department without driving up the costs.
Check out our slide deck or get in contact with one of our advisors today to learn more about how we carve these resources in to your existing budget.
Outsourcing Your HR Department by Mohita Nagpal, DARE /Link/ Retrieved April 18, 2013
When to outsource HR duties and when to hire by Dan Emerson /Link/ Retrieved April 16, 2013
Is it time to outsource Human Resources? by Toddi Gutner /Link/ Retrieved April 18, 2013