27/09/11

By Neil Carrington, Bon Accord Employment Services

To outsource or not to outsource? As employment law is increasingly bound by red tape, more and more businesses are asking themselves this question. As it is now possible to outsource the full range of services from the HR spectrum, increasing numbers of companies are choosing to take the plunge. CIPD’s ‘HR outsourcing and the HR function’ survey report revealed that 29% of participating organisations received employment services from a third party supplier.

The survey indicated that smaller companies without a HR department are more likely to outsource their whole HR function, including policies, recruitment, training, payroll and benefits. Some companies pick specific areas to be dealt with externally. For instance, CIPD’s survey showed legal activity and pensions as the most common. In our experience, companies most often require extra assistance with policies and procedures or payroll. Legislation for policies and procedures shifts regularly, making it a potential minefield for employers. Payroll can also be a thorny process as errors made in these fields can have serious long-term consequences.

Many businesses have found passing these functions to a specialist employment company the most practical solution.
But outsourcing will not be suitable for all. Over two thirds of survey respondents did not choose to outsource any aspect of their HR. Why? Most larger companies already have an effective in-house HR team. Others businesses worry that an external company might lack vital in-depth knowledge of their business or the local area, so opt to keep all their operations internal. We often encounter companies which are reluctant to relinquish their control over HR procedures, despite huge managerial commitments. Fear of the unknown, the prospect of additional costs and confidentiality worries can also cause concern.

But finding a suitable HR company can make all the difference. The ideal choice will thoroughly understand their client’s business and boast extensive knowledge of the local area. They will have proven expertise and provide value for money. They will be able to slot comfortably into their client’s corporate structure to ensure a smooth transition of operations. As for confidentiality, all employment companies make this a priority. A thorough assessment of the HR company’s credentials before engagement will minimise the chances of any outsourcing disasters.

Respondents of the CIPD survey outlined access to skills and knowledge, quality of service and cost reduction as key drivers to outsourcing. Smaller businesses often find using a third party for expensive functions such as payroll is financially beneficial. One of our clients discovered that outsourcing their HR management gave the managers more time and energy to concentrate on their core competencies and client interface, improving operational efficiency and, ultimately, competitiveness.

Outsourcing also provides economy of scale. Clients can receive the experience of an entire professional HR department, often for a cost lower than the employment of an individual. It also minimises the impact of staff turnover.

Many clients find that it is only after fully outsourcing their HR that the true cost upon their organisation of keeping a small team employed internally is realised. For small businesses, the sheer weight of the HR management load can become overwhelming. A HR company can help to reduce this burden or remove it entirely. They can also provide a wealth of experience in all types of HR issues, the depth of which is difficult to find in a single candidate.

Outsourcing is particularly suited to companies with offshore operations, to bolster their HR arrangements and keep them in line with HMRC requirements. But it’s not all about oil and gas: HR is one of the most transferrable professions. When we began, our company specialism was the marine industry. But the experience has enabled us to launch into related industries, such as renewables and healthcare. HR support can be applied in any sector.

We believe that the key to successful outsourcing is integration into the client’s businesses and accessibility. Remote services do not enable integration with the client, and impersonal, distant brands are not appealing. People want to talk to people. Smaller business rarely have the resources to employ a full-time, in-house team that can instantly react to HR issues. Our philosophy is to closely replicate an in-house team in a convenient, cost-effective way.

We urge organisations not to drown under piles of dense, difficult and frankly, dreary employment regulations. Instead, consider how outsourcing human resources could free up valuable time and resources to allow your company to concentrate on its core business.

More information about Neil Carrington

Neil Carrington co-founded Bon Accord Employment Services in 2010. He has 17 years of experience in human resources. Neil discovered his passion for people management while working in as an offshore marine manager, where he was regularly sought out to provide support and advice to colleagues. He was invited take over the personnel department and was responsible for the employment of 2,500 people worldwide. In 2001, Neil was headhunted by an offshore employment company and immediately became managing director, employing 10,000 people.

More information about Bon Accord Employment Services

Bon Accord Employment Services, a company focused on niche aspects of human resources support, was founded by Neil Carrington and Donna Reid. After working together, Neil and Donna established Confiance Employment Services in Guernsey. In 2010, due to their shared Aberdeen connections and a demand from international clients with north-east operations, they founded Bon Accord. Neil and Donna believe that an investment in systems and technology is necessary for people management but face-to-face communication reigns supreme. Bon Accord is underpinned by the philosophy that a trustworthy, reliable, confidential service is critical, and a local focus is essential. To emphasise this commitment, Bon Accord is launching lunchtime HR support surgeries in Aberdeen’s peak business districts. SMEs will have the opportunity to have queries answered quickly, conveniently and free of charge.