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Finance directors increasingly consider outsourcing HR

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The burden of complying with regulations means that many finance directors either have or are considering outsourcing specialist functions.

Noble Corporate Management polled finance directors of 100 AIM listed companies to discover their attitudes to outsourcing.

The research found that some 88 per cent of AIM company finance directors would like to achieve best practice in complying with corporate regulations, but 75 per cent are concerned about the increasing amounts of time spent on these.

Over 50 per cent do or would consider outsourcing health and safety risk management, over 40 per cent do or would consider outsourcing company secretarial and over 35 per cent do or would consider outsourcing HR.

The main reasons for outsourcing cited by respondents, were: it frees up time to focus on core business, it’s cost effective and it provides access to high-quality personnel.

David Page, chief executive of Noble Corporate Management, commented: “Clearly companies must run their businesses in line with EU and UK regulatory rules and regulations.

“Directors of small to mid-sized businesses are considering outsourcing as a way of managing the very real risk of non compliance. This may be as a result of just not being aware of rules they need to follow or not having sufficient time and the right resources to comply with regulations without distracting from their core business efforts.

“Outsourcing, when well managed, can free up directors’ time so they can focus on core business as well as giving them the confidence that they are complying with their legal and regulatory requirements.”

5 Responses

  1. I think that it’s really a
    I think that it’s really a matter of how in control you want to be of your company’s operations. Of course if you can find good deals with the subsidiary that you’re hiring to do all your recruiting for you then by all means. I agree that smaller companies would benefit the most but the larger companies would probably prefer to keep its own in-house HR team so that they can manage and fine tune different aspects of the employment scheme.

  2. The hidden opportunity cost of outsourcing
    “Knowledge is potential power”.

    One of the potential drawbacks of wholesale outsourcing of the recruitment function to an intermediary is the loss of market intelligence which is gathered during the initial recruitment and selection process and the initial rapport which is crucial in todays’ tight labour market.

    For example, the intermediary will decide how, when and why a particular method of candidate attraction is employed based on the knowledge they’ve acquired about your business and the likely ROI.

    They represent the company brand and will determine how your are “sold” and therefore perceived by candidates

    Furthermore, during the screening process they will acquire knowledge of:

    Your competitor activity – recent innovations, performance, key players and clients

    Have determined your companys’reputation and position in the market place based on candidate perception and feedback

    Assess how competitive your remuneration package etc compares with other companies and of new innovations in the marketplace.

    Some of this information can be gathered during the interview process but time is precious. It also relies on a robust interview process to ensure the information is captured, recorded and acted upon.

    Recruitment is not simply a paper exercise it is a relationship with individuals (agent and candidates) who cannot be commoditised as readily as a pallet of widgets.

    Choose wisely and ensure that MI is included in the feedback and contract reviews. Then you have a “value add”.

  3. I sympathise with Iain, but…
    Iain makes some good points, and over the years I, too, have been forced to reach the conclusion that to become a Finance Director requires an imagination bypass in many cases. However, not all FDs are so blinkered and backward in their thinking, just as not all HR people are as commercial and strategic in theirs.

    As a profession over the years we have fallen into the trap of wanting to carry out our own favourite project because it is a “good thing” to do, and have felt like taking our bat and ball home every time senior managers (Finance or otherwise) said no. All too often we have tried to do this without developing a commercial business case, or doing the political groundwork to get buy-in to a programme (payback is rarely enough!) Perhaps Iain’s absense management example was such a struggle because influential managers did not want to attend a training course that was likely to oppose their own weaknesses?

    Add to that the fact that we have a professional image and qualification structure that (to the outside world at least) looks insular, operational and tactical, and it’s no surprise buy-in is so difficult.

    If the Kingsmill report on Human Capital had not been such a pathetic cop-out, perhaps we would now be in a position to start having a more meaningful dialogue on these issues, as we started to put the meat on the bones of OFRs and the like.

    But really, we have nobody to blame but ourselves.

  4. Sorry but finance are not always right
    Finance Directors often fail organisations with their targets of cutting costs and/or outsourcing this function or that function.

    Yes outsourcing certain functions can saving money, why be responsible for maintaining the building or the heating when there are very good companies to do this for you. But all to often the outsourcing is nothing to do with Non compliance issues or focusing on core business but the failure of organisations to fund an effective HR Function.

    From personal experience I have spent many years in different organisations trying to get funding for various projects which I could prove would make an overall saving but time and again only to get told their was no budget.

    In my last organisation I finally got them to spend £8000 on training for managers in absence management, in the first year the reduction in sickness payments was over £100,000.

    Another example being Time and Attendance recording where budgets are more important than anything, if you speak to any of the major supplier they will quote saving of at least 10% per annum. If an organisation has a salary bill in excess of 1 million per month 10% saving is over 1 million per year but can you get the initial investment of £60k to set it up. On yes I forget there is not spreadsheet that promises a 10% saving.

    All too often Finance will not invest money to save money as they can’t see further than their budget sheets.

    ave I missed something or are Finance Director trained as HR Directors as part of their qualifications. As time and again they seem to think they understand HR better than we do.

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