As businesses are looking to grow, the main priority for them is to find ways to cut costs, wherever possible and to focus primarily on generating business. As such, many businesses will look at reducing their overheads. This may include cutting down on travelling and looking at reducing those costs associated with support functions, such as HR. Functions such as HR are important, as they offer support to the business and allow staff to get on with other tasks, but they do not generate cash into the business. They do assist with generating cash, as they free up time for staff, but this is not the designated function of HR.
It is often the case that a lot of time and money is invested into HR departments, when it is not really necessary. It may be that a business needs some support from time to time with HR admin, payroll, general advice or help when they have a particular recruitment drive on, but they don’t need the expense of paying for full or part time staff. This is why many businesses are going down the route of outsourcing their HR functions.
The best way to find out more about how much you might pay for your HR services is to speak to suppliers today. Complete the form at the top of this page to speak to 4 top UK agencies. Comparing quotes with Approved Index is free, quick and easy, and it could save you as much as 40%.
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Breaking down the costs of HR FunctionsHuman resources operations, the interface between your company and your employees, includes many disparate and seemingly unconnected elements that HR prices can be hard to calculate. What exactly should you be paying for different levels of HR support or outsourcing and how does it compare to the cost of maintaining an in-house HR department?
|HR Audit||Review your HR procedures & suggest quick fixes.||£500|
|HR Support||Provide aid to your business or internal staff during large projects.||£100|
|Outsourced HR||Export all human resource processes, including reviews, payroll, etc.||£200+|
Some of the options in the table above cancel out others; a business looking for a one-time audit, for example, is unlikely to outsource their HR as well. HR support however, could potentially happen in conjunction with either of the other two processes.
Of course, there are other areas where your business may require HR assistance; to understand what might be involved in your outsourced process, it is important to speak to a range of suppliers - Approved Index can help here. Fill in the form at the top of this page to compare top UK HR agencies today.
A company with its own in-house HR staff, rather than outsourcing, may be looking for an independent HR consultant to come in and tell them where things are going wrong and what could be done better. A busy company which puts daily demands on its HR team may deprive them of the much needed time required to keep up to date with employment legislation, undertake further training or monitor the efficiency of their procedures (let alone implement new ones). An HR audit will provide an in-depth review of your human resources procedures, make any quick fixes and suggest remedies and training required.
Prices: A One Day HR MOT from Lightbulb HR costs £499 at the time of writing.
Similarly, due to the pressures your HR staff may be under due to expansion of the company or just plain busyness, they might require support from an outside company to ensure compliance with legislation, get advice on disciplinary, redundancy, recruitment or more mundane issues and have updates to employee documents carried out automatically. These kinds of HR support services as well as on-site visits when necessary are available on short contracts from most providers which include indemnity against losses at employment tribunals as long as their advice was followed to the letter.
Prices: At the time of writing, Lightbulb HR offers HR Support from £99 per month. QC People Management Ltd offer HR support including indemnity for from £109 per month.
‘Fully outsourced’ HR services offer all the elements that HR support packages do plus extras. Because these extras are tailored to each company’s specific requirements there is no standard package for outsourced HR. For example larger enterprises may require elements, such as multi-jurisdiction employment law updates, that smaller companies would never need. Outsourced HR will always include on-site support and usually software for managing employee records. It may also include:
- Performance management
- Appraisals and reviews
- Recruitment and induction support
- Training and development support
- Employee benefits programme
- Payroll processing
- Absence management
- Employee engagement
The key advantages of HR outsourcing though are cost and efficiency savings. For a large enterprise, a whole HR department with its attendant paperwork can be reduced to a single software package and on-site support when needed.
Prices: No standard package so no prices to quote. A small business is looking at least £200 to fully outsource HR functions. Larger organisations will normally pay a fixed monthly rate depending on the number of employees and how many extra services are required.
Human Resource Consulting Fees
HR consultancy options vary depending on the agency or professional you mean to work with. Some of these costs will be similar to those mentioned in the sections above, but there may also be different options or price structures to consider. Often, an HR consultant will have a standard rate that they charge, this rate could be hourly, task-specific or based on a day-rate - of course, some consultants will have even more options which may affect the price.
The best way to find out how much you might pay is to find a transparent pricing structure; this means that the consultant provides all of the information about pricing upfront, without hidden costs. Of course, there can even be further considerations here - is this a one-off HR issue, or are you likely to be working with the consultant on a rolling basis? Understanding this can help you to make the correct decision.
A one-off, pay-as-you-go HR consultant agreement is likely to cost anywhere from £40-£100 per hour, depending on the experience of the consultant and the task that needs to be completed. Alternatively, a retained HR rate - when you work with the same consultant for an extended period of time - could be anywhere from £5 to £10 less, per hour. With this second option, it is important to remember that you will probably need to meet a certain quota of hours to be eligible for a lower rate.
The table below includes a very basic comparison of HR consultancy fees, including a side-by-side comparison of pay-as-you-go and retained consultant costs.
|Consultant Agreement||Price per Hour||Number of Hours||Total Cost|
As mentioned already, these figures may not exactly reflect your own quotes, but do give some idea as to how much you might pay. As shown, the prices shown include the cost of one hour of work as well as the cost of a full day; these prices can be altered further to reflect the cost that might be encountered over the course of a week or month.
If a consultant looks too expensive, than outsourcing to an agency is probably the best choice; fill in the form at the top of this page if you want to compare top-quality HR services today.
The Cost of Outsourcing versus In-HouseOne of the main reasons for outsourcing HR functions, is the potential cost savings it can bring. This is really important, particularly for small businesses who are trying to reduce their costs and improve their overall efficiency levels. When you employ an HR person, it is not just the salary you need to take into account, but you also have the additional costs of training, implementing HR systems, plus the time and money which would usually be invested into developing the HR processes. As an example, you may hire a full time HR Manager on a salary of £50,000 with benefits and NI included, but you would also need to spend time on training and development. Whereas, if you decided to use an outsourced HR Manager, you would pay, on average, around £40 per hour. Even if you were using the HR Manager for as many as 10 hours per week, you would still be saving on overall costs.
The size of your businessWhether or not HR outsourcing is a good idea, costs will generally depend on the size of your business. If you have a small business, with less than 50 employees, it may not be beneficial or cost effective to hire a full or part time HR person. However, with more than this, an HR department would probably bring a lot of value to the business. A lot of it depends on the needs of the business and what works best. Many small businesses only need HR to help ensure they are being compliant, while larger businesses will need HR to support with full functions of the business.
Human Resources Cost Per Employee
Calculating the cost of HR can be done based on the number of employees you have working; an IRS study estimated that HR activities cost around £876 per employee. This figure included was based on the cost of running an HR department - including salaries, information costs, etc. - as well some other wider costs. As well as the salary and other costs mentioned here, this cost per employee also included recruitment costs, training budget and other incremental factors.
Obviously, the figure quoted above is large; based on it, a company with 100 members of staff could expect to pay just under £90,000 a year for internal HR. With these figures in mind, it becomes even clearer why so many businesses opt for external human resources - especially smaller companies where the annual cost of human resource staff could seriously hamper profitability.
Unlike this sort of expensive internal resource, an external company often works out cheaper simply because resources are much more focused on specific activities. A payroll specialist, for example, can ensure that salaries are paid and managed effectively, without also having to worry about recruitment and other HR services.
What may influence the cost of HR Services?
Compare HR Costs & Prices
If you are looking to cut costs and grow your business in other areas, it is definitely worth looking into outsourcing some, or all, of your HR functions.
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