The value of a business is a function of how well the financial capital and intellectual capital are managed by human capital. You’d better get the human capital part right.” – Dave Bookbinder
Dave Bookbinder who is the author of the best seller book about the impact of Human Capital (PEOPLE) on the valuation of a business enterprise called THE NEW ROI i.e. Return on Individuals. Basically, Dave is engaged in Business and Intellectual Property Valuation as a Corporate Finance Executive.
Background :
Previously considered as Personnel & Administration ( P&A) the function which used to take care of Human Capital by contributing in the areas limited to recruitment, attendance management , leave administration and labour related legal compliances only. However, it has started evolving significantly in last two decades. This has brought great changes in the field of Human Resources as a function and its way of working. Again, thanks to globalization and emergence of Multi National companies.
The Role expectations from Human Resources changed from merely a service provider for routine administrative activities to play a role as strategic partner in organization’s growth. This has further enlarged the role of HR as business enabler.
As an outcome of this, HR is required to play vital role in the areas aimed towards Organization Development interventions. Facilitate Talent Management processes , Succession Planning ,Performance Management systems, Compensation and Benefits, and more importantly employees engagement initiatives .
This has further led to decentralization of HR operational activities allowing HR Resources to concentrate on the Key Areas to contribute.
Areas for Outsourcing for HR Shared Services
- Attendance Administration
- Benefits Administration
- Compensation Administration
- Employee Communications
- Employee Help Desk
- Payroll
- Rewards & Recognition
- Staffing Solutions
- Learning & Development
Advantages of HR Shared Services
Defined Service Level Agreements
Expert Services
Accountability & Efficiencies
Technology Support
Resource optimization
Limited Liability of professional Charges
While we all agree upon the utility of the HR Shared services, the pertinent question may be asked by the employers especially from the MSME sector that it may be useful for big corporates, MNCs etc. but how can it be useful for us ?
The answer to this is simple and straight. Its all about the mindset of the employer. Typically, in almost all MSME industries, the promoter himself performs the role of HR Manager and get stressed by the activities which can easily be outsourced.
HR Activities can be outsourced by a MSME
- Recruitments
- HR Policy Design
- Various Forms & Formats
- Attendance Management
- Performance Management
- Payroll & Compliances
If the above activities are put in place right from beginning, it leaves quality time to the management to focus on strategies and growth of the organization .
Risk Factors
- Vision : Although the vision for the organization is in place, the business volumes may not always support. Hence, normally the management thinks about such options only when it starts observing growing spike in the volumes.
- Clarity : When the small companies start looking for such options, they lack clarity on why and what to expect. This results into spending amounts which have been marketed by the agencies and not getting what is actually needed .
- Agency Selection : It has been observed that many a times , in order to save on the charges, the selection of the agency is made only on the basis of commercial charges and compromise is made on the competence of the agency this certainly leads to chaos.
Considering all the factors as mentioned above, it is quite important for any organization to decide with absolute clarity on availing HR Shared Services. Generally big conglomerates can afford to have in-house HR Shared services. However, MSME’s can opt for external HR Shared Services . Hence, either “Forming” or “Transforming” HR , Shared Services is the future
