Small business HR outsourcing
As a small business, outsourcing your HR needs is usually best - find out if this is the case for your business
What is HR?
A Human Resources (HR) department is a part of an organisation that focuses on staff recruitment, management and development, and provides a wide range of critical benefits for any business.
An HR department is a key driver in a company’s current and future successes, as it allows for a business to grow and develop.
The HR department provides legal and administrative advice and services, training, management and all of the necessary tools that a business may require in order to function and grow successfully.
From recruiting and training new members of staff, to training and paying existing members, the HR department allows for staff to perform their own roles without being distracted by administrative duties.
It should also aim to improve and develop staff, and provide them with the tools they require to perform their job well, such as assistance with travelling for business, new equipment or training.
Almost as many as 80% of executives rated employee experience very important or important according to a recent Deloitte report, and this is reflected in many organisations – as a happier workforce means a more productive workforce.
Many HR departments now aim to inspire employee empowerment for this reason, through mentoring, community outreach, philanthropy and other employee engagement activities.
To find out more about the range of HR options that are available for your small business, read on. If you would like to compare quotes from several chosen suppliers, simply complete the form a the top of the page.
HR for small businesses
Small companies, just like larger companies, require the best HR to make ensure they can be as successful as possible. Many of these HR issues will be evident, and clearly, it is important to have these procedures in place.
For many small business though, these aspects can be difficult to define, so we have created this page to help you.
- Which small businesses need HR?
- Should I invest in HR?
- Is my company big enough to need HR?
- HR outsourcing for small business
- Small business HR costs
- Best HR agencies for small companies
- Compare HR options for small business
Which small businesses need HR?
Below are several of the main aspects of HR that every business will have to deal with at some point, and as a small business it can be difficult to manage them with limited resources and staff hours.
- Measuring performance: it can be difficult to decide when and how to measure performance in order to develop staff
- ‘Doubling up’ job roles: as a small business grows, HR responsibilities are often covered by staff who then ‘double up’ in their own responsibilities relevant to their job, and HR responsibilities – this reduces productivity and means untrained staff are performing HR duties
- Lack of time/resources dedicated to HR: in a small business, a lack of dedicated HR staff means that employee issues will not be dealt with properly, and company policies may be difficult and slow to change
- Staff retention: staff are your most important resource, and in order to retain your best staff members, you need to provide the best support and training for each of their specific needs. For lots of small businesses these can go ignored, as staff are occupied with their everyday tasks, and are usually not prepared or trained to deal with these issues
- Training: in relation to staff retention, training allows staff to grow and develop themselves and should be encouraged, forming part of their own personal development plan to ensure that they feel – and actually are – valued members of your organisation, as well as being better equipped to perform their duties
- New staff recruitment: Finding and hiring the right members of staff for your business can be, and often is, a very difficult process, with a lot of your time and money at stake. Having a specialist team to carry out this duty for you will save you plenty of both, and ensure that your business is finding the right staff to ensure your current and future success
- Rewarding staff: whilst this does obviously increase an employee’s self worth and value towards the company, the main benefit is that it encourages best practice towards your company policies and procedures, as well as motivating staff to perform as well as they can. It can be difficult to keep track of these rewards, though, as well as various staff member’s individual performance metrics, especially for a small business with limited resources and staff hours
- Long term sickness: it can be difficult to know how to deal with a staff member’s long term sickness, and it can be tough to apply the right mixture of sympathy – staff will be sick from time to time, and need time to recover properly – and best practice, to ensure the sick staff member is aware of their rights, but also their responsibilities – as sickness will cost your company money and negatively affect productivity
- Keeping up to date administration with changing employment law regulations – these can quickly become out of date – as legally binding documents, they must be current, relevant and useful, and for small businesses with a lack of resources it can be tough to dedicate the resources for this
- Health and safety – it’s crucial – both legally and morally – to ensure that your employees have a safe working environment, and sufficient training to work with all relevant equipment. Proper implementation of more general aspects of safety – such as CCTV, alarms and fire escape routes – require a great deal of attention and knowledge, and with a limited amount of staff hours, these aspects can drop in standards
There are, of course, many more aspects to HR for a small business, but these are some of the main ones. To get more information directly from our suppliers, fill in the form at the top of the page.
Small business HR solutions
To summarise, one useful way to help you decide whether to invest in the services of an HR firm for your small business, is to consider whether any of the above points are affecting your business.
Many owners and members of staff will begin to take on tasks such as recruitment, training, and payroll, whilst their business-related responsibilities suffer. It is at this point that it is worth considering the worth of your time as the owner of your business, and the members of staff that work for you.
These tasks can all add up and remove valuable time from the productivity and overall success of your business – if you and your staff cannot keep up with the above aspects of HR and maintain their productivity, it is probably time to consider outsourcing your HR needs to a specialist organisation.
HR checklist – does my small business need HR?
In addition to the above aspects of HR, it is also worth asking yourself the following questions:
- Do you have a high rate of staff turnover at your company?
- Are all of your employee files organised properly? Do they contain all of the relevant documents and do you know what they are? Are the stored correctly? Do you know how they should be stored?
- Do you have an employee handbook and do all employees have access to it?
- Are you recruiting new staff as quickly as you would like to?
- Is a performance review process for employees in place?
Often this can come as a result of you not fulfilling your employee’s individual requirements.
The contents and storage of these details, as well as the way your business handles them, are strict.
This will give details on all of your main policies and procedures.
As previously mentioned, staff are your primary resource and are crucial to your growth.
Formal feedback will enable employees to work to the best of their ability.
If your feel that any of these areas require some work and investment of time and money that you cannot provide, find someone who can come in and help you take these things under control.
Business size – is my company big enough for HR?
In short – yes, your business is always big enough for HR, no matter what the size. It can, though, be difficult to define the size of your business by its number of staff, however some industry experts do have suggestions on how many HR staff certain business sizes require.
The table below contains figures based on a professional ratio that suggests that a business should have 2.7 members in a HR department for every 100 members of staff. The ‘Outsource or Internal’ column indicates which option will generally be cheaper based on the number of staff.
By using these figures, it is clear that smaller businesses will not reach the amount of staff needed to have even one dedicated HR employee, instead recommending outsourcing HR for cost effectiveness.
|Number of staff||HR staff needed||Outsource or internal?|
|5||Less than 1 HR personnel||Outsource|
|10||Less than 1 HR personnel||Outsource|
|20||Less than 1 HR personnel||Outsource|
|50||1 HR staff||Internal/outsource|
|100||2-3 HR staff||Internal/outsource|
|200||5-6 HR staff||Internal/outsource|
Internally hiring a member of staff can often be a much greater expense to your business than outsourcing your HR needs – even businesses with over 200 employees will still outsource HR to alleviate costs or ensure these duties are performed correctly.
HR outsourcing for small businesses
Hopefully the information on this page has made it clear how important HR is to your business and it’s future success. There are two key options at this point, which will be broken down to help you decide which is best for your organisation:
Internal HR staff
The first option is hiring an internal member of HR staff, either by promoting from within or through a normal recruitment process. See below for the advantages and disadvantages of hiring an internal HR staff member for your small business.
|Good chance to promote a member of staff/give them a new role||Not a cost effective solution – the member of staff will have to be salaried which is a much greater cost than outsourcing HR|
|You can specifically choose who deals with your HR||HR agencies are experts in what they do – it can be difficult to get a member of your own staff to uphold these standards|
|Having a HR manager actually in your business will make HR processes and changes quicker as meetings are likely to be easier to arrange||Your staff members and you as the owner are liable if any HR processes go wrong|
|If you promote a member of staff internally, there will be a huge responsibility on your part to train them to a proper standard|
|Dealing with HR is hugely time consuming – and to do it well, it requires an even bigger amount of knowledge and investment of resources|
|Outsourcing HR will usually be a more cost effective option for small businesses||By outsourcing your HR requirements it means you will not get a chance to internally promote a staff member and give them a new career path|
|As previously mentioned, an HR agency will be experts in that field, ensuring your business will receive the highest standards of HR management||Not having an internal staff member means less direct control over your HR management|
|By outsourcing your HR needs, you can take the pressure of yourself and your staff, and direct your attention and resources to tasks more relevant to your job role||As your business grows, it may become less cost-effective to outsource your HR needs. At this point it is worth considering an HR team within your organisation.|
|HR companies will tailor their offers to your business, ensuring you get the right HR management for your needs||Implementing changes may take longer because as your HR manager will not be in-house|
|There is huge value in having experts perform your HR management – they will stay ahead of any trends and changes in HR, and constantly aim to improve their services to ensure you remain their client – it’s within their interests, therefore, to give you the best service they can|
|Your business will not be liable for any problems that arise with your HR|
Summary of pros and cons
Generally speaking, internal HR staff will give you a chance to promote internally, or at least select your own HR staff, meaning you have more control over the specific person(s) for HR. Having them in house will also mean changes may be quicker, as you will be able to see the member of staff face to face.
Internal HR staff, however, will usually not be the most cost effective solution, and there will be a huge responsibility on your part to train the member of staff and uphold their standards.
Your business will be liable for any HR problems, and generally, dealing with HR is a difficult and time consuming task that will require a huge amount of resources.
In outsourcing your HR needs, you will be saving a huge amount of time and resources – crucial to a small business’s growth – all while using the industry leading expertis that your selected agency will offer.
Outsourcing HR is more cost effective for smaller businesses – as explained in the next section – and will take the pressure of you and your staff. It’s also worth bearing in mind that it is in the HR agency’s best interests to give you the best service they can, as you will stay with them.
Small business HR costs
One of the main reasons that a business may consider outsourcing their HR needs is due to the potential savings this can bring. In a small business, this is obviously a critical aspect of growth, as keeping costs down will allow you to expand in the future.
Internal HR staff costs
Taking on a HR manager or executive will not just cost your business their salary, but also the cost of their recruitment, training and the time and money invested in the establishment of new HR processes.
According to reed.co.uk, the average HR manager’s salary in 2017 is £47,000 – £3000 higher than 2016. In addition to this, as mentioned previously, you will also pay for their training, which incorporates the salaries of those that train the new HR manager, as well as any costs of new materials and equipment that the new staff member will need.
These costs can easily exceed thousands of pounds.
Internal HR staff estimate in year 1: £70,000+
Outsourcing HR costs
It might be that your business needs occasional support with your payroll, admin or more general advice, but it would be unecessary to pay for an internal HR manager – hence why businesses are taking the route of outsourcing their HR needs.
Obviously, with the huge amount of various HR functions that a business will need, it can be difficult to give an accurate price.
|HR Audit||Full review of current HR procedures to provide any quick fixes||£400-£500/month|
|HR Support||Provide aid to your business or staff during large projects||£100-£200+/month|
|Outsourced HR||Outsource all HR processes, including health and safety, payroll and so on||£100-£300+/month|
It is worth bearing in mind that a business looking to outsource all of their HR needs probably will not then get a separate HR audit – so these costs do not necessarily build on one another.
You could also consider a HR consultant, whose prices will differ depending on the professional or the agency you end up choosing.
They will most likely charge a standard rate – this could be an hourly or day rate or a more specific task rate, although these will not be your only options.
It is important at this point to seek out a transparent pricing structure – make sure there are no hidden costs and all information on pricing is present. Also, consider what service you will require and for how long – is this just a one-time problem or will your business require monthly meetings?
An HR consultant on a pay-as-you-go agreement will be likely to cost anywhere between £40-£100 – this will depend on the experience of the consultant and the task that needs completing.
You can be eligible for lower rates – potentially around £5-£10 less per hour – on a retained HR rate (when you work with the same HR consultant over a long period of time) but there will likely be a minimum number of hours required for this.
The following table is a basic comparison of HR consultant fees, comparing both pay-as-you-go and retained consultant costs.
|Consultancy type||Price p/hour||Hours||Total|
|Pay as you go||£75||1 (quick fix)||£75|
|Pay as you go||£75||8 (day)||£600|
|Retained||£60||1 (quick fix)||£60|
While these figures might not exactly reflect quotes you may have been given already, but are there to give you at least an idea on the rates you might pay. Feel free to alter these prices to reflect what you will pay over the period of a month or year.
If these consultant costs look expensive, outsourcing your HR needs to an agency is probably your best choice – fill in the form at the top of the page if you would like to compare the best HR agencies today.
Best HR agencies for small companies
There is, of course, a huge amount of HR agencies and this can be overwhelming for a small business – we have selected our top 5 HR agencies in the UK for small businesses, which can be seen at a glance in the table below.
|HR Agency||Key benefit||Business type|
|Avensure||HR, health and safety and employment law||Small to large businesses|
|citrusHR||Reasonably priced and diverse HR packages||Small businesses and charities|
|JumpstartHR||Project based HR work with your internal staff||Small to medium businesses|
|Moorepay||Payroll||Small to large businesses|
|William B Rose||Employment law and general HR||Small businesses|
Remember – the best way to get as much information as possible about these companies is to speak to them directly – to be able to do so, simply fill in the form at the top of this page. We can then put you in touch with several agencies that will suit your needs.
Avensure specialise in the following aspects of HR outsourcing:
- Health and safety
- Employment law
Their employment law package will provide your business with one-to-one support and advice at any time. In addition, you will be given specifically tailored contracts, handbooks and policies to help you properly manage your HR needs.
THey also include employment tribunal cover and representation, and their health and safety support includes site evaluation and action plans, as well as all relevant training.
It is worth remembering that even though Avensure may not be a specialist in other areas, they will still be able to advise you in them.
citrusHR specialise in the following aspects of HR outsourcing:
- Working with small businesses and charities
- Reasonably priced HR packages
citrusHR is an HR agency that works closely with small businesses and charities, offering tailored packages that can offer you everything your business may specifically need. You will also be provided with a personal HR consultant who can offer you advice or your various business needs.
This agency is a reasonably priced option for many small businesses, and covers all HR requirements that you may need, from payroll and health and safety, to employee rewards and recruitment.
You will be given tailormade handbooks and employment contracts, on top of citrusHR’s own human resource software, which has been designed with small businesses in mind.
Jumpstart HR specialise in the following aspects of HR outsourcing:
- HR consulting on a step by step or project basis
- Specialised support for all business needs
JumpstartHR is slightly different from the other agencies mentioned on this page in that they offer their services on an hourly basis. They gear this at small businesses who want to make use of their services on a step-by-step, finely tuned basis.
They offer a very personalised service that can be based around your small business’s needs, and can be scaled according to your current demands.
If you require general HR advice, help is on offer on a HR coordinator level, or through their strategic services if your business needs more specific help. They also have an on call service, and can offer consultancy on a more specific project basis.
By offering various services separately with no requirement for larger packages, JumpstartHR is a great choice for small businesses.
- General HR consultancy
Moorepay specialise in payroll and general HR services to both small and large businesses, and can help your small business understand and deal with taxes, benefits and legislation.
Moorepay works alongside various high street banks – meaning you can be safe in the knowledge that your payroll is in qualified hands. Their agency offers a personalised service, operating through a combination of software provision and HR support.
In addition to their payroll support, Moorepay also offer more general HR services as and when you need them, including health and safety, time and attendance recording, benefits and more.
William B Rose
William B Rose specialise in the following aspects of HR outsourcing:
- General HR consultancy
- Employment law
William B Rose offer a varied range of HR services for your small business, and even have in-house employment lawyers. Their pricing and services are transparent given that their HR services are offered in a package, and they have specific packages dedicated to HR outsourcing.
They specialise in employment law, which includes tribunal representation, general advice and mediation, as well as more general HR and health and safety support, in differing fixed fee packages, depending on your needs.
Compare HR options for small business
Hopefully, in reading this page you will know whether or not you need to outsource your HR needs. If you do, it is important to get this arranged as quickly as possible, as you may be losing money, and the quality of your business’s output may be reduced.
Whether it is something specific you need, or a more general package, it is worth your time filling in the form below to be put in touch with various suppliers who can discuss with you your various business needs and what they can do to help.