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6 Disadvantages of HR Outsourcing for Small Businesses

Every experienced entrepreneur or business man knows that whenever a business gains something new, it loses something in exchange of that.

All entrepreneurs know that everything has its disadvantages and running a business is a matter of weighing the combination of all the advantages and disadvantages that every business strategy has; and HR outsourcing is of course not an exception to that. So it’s my aim to use this article to highlight the downsides of outsourcing HR. Below are disadvantages of HR outsourcing.

6 Disadvantages of HR Outsourcing for Small Businesses

1.            One of the foremost possible disadvantages that can be brought about by HR outsourcing is that it can reduce the efficiency of a given division, at least for a while until the newly outsourced employees have successfully adapted to the work environment.

This isn’t to say that the only way to deal with this disadvantage by letting time pass by until the new employees have finally adapted. The management can provide support teams through the old employees of the company or by providing written instruction about the work environment in order to hasten the adaptation period of the employees.

2.            HR outsourcing also requires the maintenance of a good standing between the business and the agency that provides the human resources. Although highly damaging conflicts between the businesses and providers seldom happen in reality, this isn’t really the issue.

3.         HR outsourcing also requires additional tasks in maintaining external relations with other companies in order to get more favorable trades between the two entities.

4.            HR outsourcing can also affect the aggregate learning curve of the employees; that is the sum of all the respective learning curves of each employee in a given sector of the business. Since, as it has been stated on the first disadvantage, that newly employed human resources aren’t familiar yet with how things work in the given business, more learning are still required, thus, the progress of efficiently improving each tasks has been held back.

5.            The previous disadvantage also leads to another, which is the possibility of impairing the formation of a highly integrated and efficient working process. Since learning and practice come hand in hand in businesses, when the aggregate learning curve of the employees are being held back, the creation of an efficient integrated process will also be held back.

There are two possible ways to deal with this disadvantage. The entity may either provide additional training for the new employees through mentorship or written instruction, as provided earlier, or the business may also require the HR outsourcing agency that they provide a set of sufficiently experienced employees.

6.            Lastly, because of the easy process of adjusting the level of employment through HR outsourcing, the morale of the employees are definitely impaired. This impairment in the morale will be manifested in the work performance of the employees, because humans undeniable require a moral booster in order to bring them at an optimal level of performance.

However, because of the insecurity in their jobs caused by the easy process of lay-off provided by HR outsourcing, the chances of damaging the employees’ morale are very high. This, so far, can only be dealt generally by the employee himself.

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