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Why HR Function Outsourcing for SMEs

Comment [Husys1]: GR ideally if started with common activities which CEO does when lack of HR department will help readers to see the value HR can bring in place..i am writing a simple one but you can add more which will help, I can apply at 1:15 am

Diary Entry of Mr.Bahujan( name truncated) a typical - CEO 15 people , IT company 18 April, 2012 8:30 am Tracked the team where about what time they come, Rahul Sonia traffic jam, Reema kid hospitalized 9:30am 3 people out of 15 by 9:30, noted late comings 10:00am Talking to team and late comers warning and task assignment 10:30-11:00- calls and mails of client respond, heard the coffee machine usage estimated 18 cups 11:00: 12:00 open shared naukri.com search for java profiles, 20 profiles sourced and searching for staff who in naukri found Rakesh ( need to talk and warn him), Pradeep, Pintu called informed that I am very busy 12:00-1:00 calling 20 people, with false name/designation, line up for tomorrow interviews, 3 people said yes 1:00 Noting team going out for lunch, switch of fan and AC when no one is there 2:00pm- rajesh and sonum missing - checked where they are 2-4 pm proposal writing, tracking responses and some queries from team 4 -:4:30: talked to suresh( CEO of x.com)- informed 3 of people he found of naukri, and clarified salary level of java people in his company and checked the expected money to offer for tomorrows interview 4:45: Rakhi, want to go home early, said yes 5-5:30 Team checkup, monitoring 6:00 : Noticed the movement and bye from team, okay carry on No updates from team 6:30 office empty, let me also packup, I need to make sure tomorrow people need to send the day status , few minutes of googling , linkedin End of the day

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Like Mr. Bahujan , there are about 1000s of CEO have the similar diary entry in some form, I am sure you can understand the time wasters for CEO , if they can be handled better, what is the time CEO can really look to make his company progress further ? ---------------------------------------An HR Function is critical component of employee welfare which inturn help the organization, no matter how small or big organization. The typical HR Responsibilities include support in business planning process, manpower need assessment, plan for hiring, induct the employees well, build policies and, procedures for smooth operations and above all build a frame work for the most critical asset of the organization human asset.. HR also takes care of the pPerformance management and development of people at each stage of their life cycle in the organization. HR helps in making those tough decisions taken by business as well as the employees in exits. Every business goes through all these irrespective of them having their own HR or not. However, many times the SME business owners/CEOs take the role along with people around based on need. However, a formal way of approach in addressing the needs of Human Resources in organization would help in building and sustaining business. Any small incidents related to people can cause a huge damage to the employee motivation in the organization. Since the SMEs cant really spend that time and energy, there is an increasing trend in HR Function outsourcing with the experts and benefit in business improvement.
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How HR Outsourcing benefit an SME

Setting up Strong human resources practices have a great potential for increase in your business value in productivity and profitability. But, the ability of HR to foresee the statutory changes, people behavioural patterns and keeping pace with the changing environment has a significant need for resources. The more time spent by the business owner on these tasks take them away from their focus on core business development and new business acquisition. Outsourcing the HR Function through an expert company would make more time for your business. The SME also can gain from the expertise not just the resource but also the capability of the firms engagement with multiple industry exposure and brining in the best practices and customize. Many SME businesses understands the need of outsourcing the function and gain quality time for improving business drive, but they end-up many times looking at the cost spent as COST and not the advantages. The general thinking of I can do it attitude kills the productivity of the Owner/CEO. In some of the cases who have appointed their HR Manager, HR Associates also need lot of support in making them productive. In such cases the business owner himself/herself spends time as a HR Head and eventually giving away their precious time away from the core of the business. The other reason for not engaging an outsourcing partner is the fear of unknown and the ability to take a quick measurement of advantages and taking decision.

The Big Problem of Understanding SMEs:

There is a definite lack of understanding of SMEs by many budding HR professionals and entrepreneurs. There are many who have been hearing the SME buzz and joining the bandwagon. There is a clear need for education which the SME owners/CEOs have to take responsibility to educate about their needs and expectations through the Industrial Associations, Seminars and various media/forums. Serving SMEs means a extreme creative best of mind in innovating solutions and make it affordable with value for business. This means a lot for any budding HR professionals to stay put in what they do and consistently learn, create, modify, add, delete, re-start, re-think to survive. It is definitely a time taking process which the investment community to come forward and support such venture in future. There is definitely a positive response that we noticed with SME CEOs over last Decade and this should make it easy for the future enterprises in the HR Function Management and Outsourcing Space.

Who are the players in the HR outsourcing space?

HR outsourcing providers generally fall into 4 categories as per Husys Model: Part HR Outsourcing ( Most Popular ) Here in this case the companies in the HR outsourcing space cover the specific responsibilities of HR as a service. The classic outsourcing is in Recruitment, Payroll, Back Office Processes, and Transactional Outsourcing. These services are provided using the Technology and with least human interface possible and also paid on per transaction based. Pros: Easy to identify and outsource, easy to monitor, easy to take decision Cons : Integration to the overall business is still the responsibility of the CEO/Business Owner Availability of such vendors in the Market: Very High

People Outsourcing (2



Here in this case the companies would provide people with the required expertise for a short or long -term duration with a clause to transfer them on the rolls of the company eventually. This is also called as Flexi/Leased Staffing. The

Professional Employer Organizations who manage the employment and the statutory obligations of the employees deployed at the client location (SME). Pros: For Organizations - No long-term people liabilities, Ability to absorb at a cost if proved a good resource. For employees its flexible and an option to get absorbed. Cons: The employees always lookout for moving on the rolls of organization, No obligation for employee to be bind except of the agreement, Internal bonding may be difficult, Fear of losing the job anytime. Availability of such Vendors in the Market : Very High

HR Consulting / Coaching / Advisory / Training:

The most preferred choice of highly expert HR Professionals based on their capabilities. In this case the expert in HR would help the organization in diagnosing, suggesting the remedial actions for improvement of business support. Many times the assignments are of short-term in duration where the expert spends specified number of hours in advising the changes that can be brought in the organization. Currently the Consulting assignments are more moving towards coaching engagements to bring more and more work translation through CEO mentoring/Coaching. Pros: High expertise availability, No long-term obligation Cons: High Cost, Ground level delivery still becomes the responsibility of the organization/business owner. Availability of Vendors in the Market: Many, Individual Providers

HR Function Management Solutions ( HR Function Outsourcing HRFO* Proprietary model of Husys):

HR Function Management solution helps in building and managing the HR Department for SMEs who cant afford to build their own. The ability of the firm would help in strategizing the business related HR issues along with management and deployment of the ground level resource to handle the tactical and administrative issues. This outsourcing may be helpful in managing the full life cycle of the employee in the organization. This would help the CEO enjoy the benefits of Consulting but also the delivery without having to work on the actions by themselves. Pros: SMEs best option - Highly Cost effective and value driven. Helps in all the functions of HR integrated to business. Highly Business focused HR. Cons: Less Choice Few providers with a right vision. Stability of vendors in business. Inability of CEO to get maximum of the opportunity can lead to heartburns. Gets highly process driven sometimes.

With the advent of the cloud computing and the Software as a service option is a definite advantage for SMEs in taking above services and sustain for long-term. Focus on Information Technology in the HR Services would be the future for SME sustenance. We at Husys foresee a strength coming from HR IT product vendors and the HR consulting organizations mentioned above would provide a better value for SMEs by leveraging their strengths.

What are the services that you can get when you HR Function Outsource?
When you outsource HR function, all the services comes with the opportunity with a differential cost based on the current state of your organization, business environment and maturity of the teams internally. There may be some packaged services as part of the HR Function Management and rest as additional services with little add-on cost advantage. These can include: Business HR Support Manpower Planning Employee Selection & On-boarding Organization Work related Policies & Procedures (Leave, work norms etc.,) Compensation & Benefit Management Employee Fun/Appreciation Programs Organizational Design, Role & Responsibilities Assignment of expectations on performance Measuring Performance Measurement & Career progression Training & Development Exit Management HR Information Management Business focused HR initiatives Additional Services may include: o o o o Recruitment Services Payroll Management Training Services IT Deployment for HR effectiveness (inbuilt or independent service)

What you want and how your want to get it?

Selecting an outsource provider purely depends on your business realities. The stage at which you are would define the HR Support that you require. Review (http://www.slideshare.net/grhusys/hr-function-indicators-for-

organisations-at-each-stage ) the slide share for such understanding. You can also read the blog postings on HR SMEs at : www.hrsme.blogspot.com
Few quick question would help you to identify what you need for your business :

A quick health check of your business

Here is a quick reference list that would help you to establish the need for HR Support. These questions can be answered through the services mentioned above as individual choice or a combination of services. Ultimately You are the Boss

Do your employees have service contracts / agreements? Have you covered your organization enough that you follow all the laws of the land? Do you have an High Turnover of your employees? Are you spending more than 30% of your time on people related issues? Do you know how to make sure the new joiner settles in the organization and contributes fast? Is there frequent change in the job roles of people and not recorded? Do you have procedures for various employee related issues? How does the employees treat the company property/material etc.,? How do you manage Disciplinary issues? How do you manage people in different locations? Is your vision understood as same to the last person in the organization? How is the employee social system impacting their performance in the organization? Do you have your managers enough trained to handle people effectively? Do you have your second line management in place? Many more

How can you identify the right partner vendor for your organization: Answer some of the key
questions for yourself in choosing the HR Services partners.

Does the vendor work with specific service levels agreements? How long the service provider in the market? Are they willing to walk that extra mile to build long-term relationship with you?

Does the Service provider have the bandwidth to handle your requirements smoothly? What is the confidence of the vendors client history? Does the Vendor have the capability to build support in providing value added services? Does the vendor has a proven track record and time tested processes? Can they help you in building your business value for the money charged? Can they help in building your cultural spirit for business advantage? Are they experts in their field? Can they bring the best practices from various other industries? Are they only interested in making business or helping your business to grow? Many related question would help maximize the yield

Do you need to outsource your HR? If you still have questions please do reach Husys (24x7) : Here are the contacts across India.