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Outsourcery bewitches

In the final of a four-part series on recruitment agencies, Noel Dyson investigates the question of whether companies should outsource their human resources.

TO outsource or not to outsource, that is the question.

And if the answer is to outsource, how much of the task should be sent to third parties?

Views within the industry are mixed on this point. Certainly, some consider it appropriate to outsource part of the human resources function, while for small businesses there is a growing trend for business owners to seek more advice on this area.

The costs of hiring the wrong person can be high to a business, as can the cost if somebody is dismissed incorrectly. There also is the issue of the workplace arrangement options available to companies.

Then there are the more mechanistic tasks associated with HR, such as the payroll.

Resource Solutions Asia Pacific director John Feeney said businesses should consider outsourcing parts of their human resources.

“The practice of outsourcing parts of HR is taken for granted in the UK and the US and is starting to become more common in Australia,” he said.

“However, there are certain elements of the HR function that should not be outsourced. You still need to have someone such as the HR director who is still responsible for the HR strategy for the company.”

Hays Personnel regional director Jane McNeill said one of Hays’ divisions, HR Solutions, was working with a lot of small to medium-sized enterprises.

She said it was also consulting to some large organisations on specialised areas within their HR.

“We’re finding there’s a big demand for the service,” Ms McNeill said.

“HR is probably getting difficult because of things such as occupational safety and health and the changes to some workforce arrangements. There’s also things such as the policies of diversity and equal opportunity.”

Small Business Solutions consultant Michelle Jurak said outsourcing HR gave a business owner a new perspective.

“When you’re working on your business you can’t really step back and see the big picture,” she said.

“When you outsource it you can spend more time on your business and let someone else worry about it.”

Ms Jurak said several pitfalls thrown up by new legislation, such as the GST, were catching small businesses out.

“If you’re an employer who’s hired somebody and they’ve told you they meet State Revenue’s definition of a contractor and they don’t, then you’re liable for any payroll tax that’s incurred,” she said.

“It also costs $8,000 to $10,000 to employ someone and it then takes them about six months to learn their role.

“If they don’t work out then that’s another cost.”

Small Business Development Corp-oration managing director George Etrelezis said the costs of employing staff were high, so a lot of small businesses were turning to the corporation for help. He said a lot of businesses were having difficulty with the new compliance regimes they faced.

“We often send them off to someone in the private sector,” he said.

“But while the cost of hiring some-one is high, if you do it well it can be a real bonus to the business.

“It’s not just compliance, it’s also a quality issue.

Equal Consulting Group group manager Leon Michailidis said that, in his experience, it was not a good idea to outsource the HR function, especially if the company considered itself to be interested in its people.

“People are starting to be seen as assets rather than resources,” he said.

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