Human Resource Organizations help to free up business owners’ time to focus on generating revenue.
Most small-business owners know the frustration of spending more time than they want or should on non-revenue-generating activities. From payroll and human resource management to benefits and compensation, entrepreneurs spend up to 40 percent of their precious day engaged in these necessary but time-consuming tasks.
The solution for many growing companies may be to hire one of the 100s HRO in India. These companies become the legal employer of your staff and handle all the payroll, benefits and HR functions.
“Most small businesses are under 25 employees, and that means the owner is the most productive, is critical to the success of the business, and has to get out there and generate sales and products. When small businesses outsource non-core activities, “they can focus on the business of their business,”
But when does it make sense to hire a HRO? While HROs aren’t for every company, those that do use them can often offer better benefit packages and thus hire better talent, at SHRC we help them to set up a Fortune 500 package of benefits.
In assessing whether or not you should hire a HRO, there are several questions to consider before you make a decision:
- How big is your company?
Expert opinion varies on how large a company should be before it hires a HRO. A general rule of thumb is “when administrative processes begin slowing down the productivity of the firm. While it is different for every company, this typically occurs when a business reaches 10 to 15 employees. “Once a company gets very big, and then it is easier to have an in-house HR department, the sweet spot for a HRO, is between 16 and 80 people. Companies that only offer insurance to a few key executives wouldn’t benefit from HROs.
- How much does a HRO cost?
Like all professional services, the way a HRO prices services varies depending on the company. Industry experts estimate that the cost ranges from about 3 percent to 15 percent of wages. Another way to look at the expense is per employee. With that measure, it would run between Rs 2,300 and Rs18000 per employee per year. For very small companies with only two to five employees, some HROs might price their services at a flat fee of Rs 7500 per month. On the flip side, it is important to try and estimate the total cost of your HR functions. Truth is, most businesses “have no idea what their true costs are, as they only think of wages but never add up all the other things.
- How much control do you want over your HR functions?
A HRO acts as a business partner to the client company. If a business owner wants to control all aspects of a business and is not open to suggestions or following through on recommendations a HRO makes, then a HRO may not make sense. Businesses do lose a bit of flexibility in the coverage they can offer when they use a HRO. Related to the issue of control is the perception of your employees. “Employees are used to seeing [your business name] on the check,” and the HRO becomes the check signer.
- What services do you need?
“Picking the right HRO is of paramount importance, have experience in the client’s industry and cover that company’s territory. Also bear in mind that some HROs specialize in a Web-based high-tech approach, while others are focused on face-to-face support.