Why Growing Businesses Are Looking More Towards Outsourced HR

With the economy starting to make a recovery from 2009’s economic downturn, 2011 is predicted to see more and more businesses being able to grow. Business growth not only paves the way for increased revenue and developments but also staff, and with this comes the implication of HR and Employment Law requirements.

Most SMEs will not have an HR department in house, although, with staff comes the need to understand Human Resources and Employment Law. However, as a Managing Director of a growing company, can you afford to take time out to learn another intricate job role in which employment law alone is said to be strangling businesses (IoD, 2010)?

HR goes far further than the general hiring and firing of the staff that are key to the growth of your company, and not having a HR provision or an understanding of employment law could be far more costly to a company than just hiring the wrong staff. For example, The British Chambers of Commerce claims that tribunals cost companies an average of £8,500 a year in 2010 with the average out of court settlement being £5,400. This is a staggering figure especially for a company that is growing and could be avoided with an ‘airtight’ HR department.

An investment in an HR department obviously a one that needs to be considered. Although in an expanding company, if you have one free desk in your office, wouldn’t you rather place someone there that is actively making you money than a HR Manager? The way around this is to outsource your HR and Employment Law requirements. Business expert Rebecca Burn-Callander deputy business editor of Smarta.com has noted that “a growing number of small to medium-sized businesses have been put off from hiring more workers because of the regulatory burden…. businesses have recently outsourced some functions to independent contractors in an effort to reduce their responsibilities.”

Melissa Goes from SkillVault, a provider of outsourced HR, legal advice and recruitment within the fast growth technology sector explains “whilst many companies cannot afford their own in-house HR department the reality is that they will require one. With new laws regarding employment being announced on a regular basis such as the impending extension of flexible working rights, the Bribery Act and the phasing out of default retirement ages it is difficult for even the most HR savvy business owner to ensure that all laws, new and existing are known inside out and adhered to. In order not to suffer as a consequence of any of these laws it is important that nothing is neglected and the right measures are taken to protect companies, and this means investing in HR”.


However you choose to invest in HR, in-house or outsourced, the bottom line is that if you don’t you may fall foul of the law, have unfulfilled staff and hamper growth.


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