Human Capital Management can be defined as a subset of practices that are related to resource management.
In the past human resources managers and human capital strategies used to be seen as part of the administrative side of an organisation. Today, however, that perspective has shifted dramatically and it is supported by many that Human Capital Management is one of the most central considerations in corporate strategies.
Human capital management is an old discipline to the financial and investment analysts as well as to the accountants and HR professionals. As defined by Baron and Armstrong (2007), HCM is concerned with obtaining, analysing and reporting on data that informs the direction of value-adding people management strategic, investment and operational decisions at the corporate level and at the level of front-line management. As Paul Kearns (2005) emphasized, ultimately about value. It requires a new set of skills that is not available in the market but has to be created; hence it is a challenging discipline, demanded by most of organizations to increase the return on investment. HCM is a system approach to people management. HCM is the discipline of acquiring, retaining, measuring, managing and leveraging the workforce. In short, it’s about treating employees as an asset rather than mere overhead – helping them understand their own effectiveness on the job
HCM is usually divided into three workforce components:
The process of HCM can be described as a business strategy or a set of IT systems and technology used to implement that strategy.
In short, Human Capital Management encompasses Human Resources and includes workforce rewards such as talent and management of the workforce.
The workforce rewards can be ranging from bonuses and benefits to payrolls.
Why Outsource Human Capital Management?
There are a lot of benefits in outsourcing HCM:
• Increase quality and speed of hiring
• Expand engagement
• Provide growth opportunities to employees
• Management of scheduling, labor, and time
• Rapidly adjust workforce organization
Outsourcing HR Reduces Costs
One of the biggest advantages to outsourcing HR functions is the fact that it can save your company money. Cost savings come from several areas, including:
- Spending less on salaries. The average human resources manager earns more than $75,000 per year, plus benefits. Depending on the size of the HR department, a small to medium-size business can easily spend hundreds of thousands of dollars on HR staff. Outsourcing those jobs to a PEO can significantly reduce that expense.
- Reduced costs for benefits, as the PEO can negotiate better rates for a large pool of clients. Smaller businesses can get rates usually reserved for large companies with bigger staffs.
- Reduced costs for hiring and training. Research from the Society of Human Resource Management found that it costs an average of $4,129 to hire an employee, and more than $1,200 to train him. A PEO not only helps ensure that businesses hire the right people to reduce turnover and associated expenses, but also has the resources in place to cut the costs of hiring.
- Avoiding penalties from noncompliance with employment laws and regulations.
- Spending less time on HR functions frees up time to spend on strategic sales and growth goals, increasing revenues. Research shows that despite working an average of 50 hours or more per week, business owners only spend about 30 percent of that time on actual business functions. The rest of their time is spent on administrative and other tasks that don’t contribute to revenue.
Investing in a PEO to handle HR functions, therefore, can produce a return on investment that far outweighs the cost of the service.
Outsourcing the HR department frees up your time to focus on other priorities. If you are like many small business owners, you’re handling human resources yourself, which can take a great deal of time away from other important tasks. In fact, one survey indicated that 81 percent of small business owners handle HR on their own – and more than 30 percent aren’t sure they were doing everything correctly.
Outsourcing HR Functions Improves Hiring
Not only does working with a PEO mean that it costs less to hire staff, it also typically means hiring better staff. As more job seekers look for opportunities that not only pay well, but also offer a comprehensive benefits package, some companies report losing out on top talent because they can’t compete with other companies. In fact, 22 percent of small businesses in one survey reported losing out on talent because they couldn’t match a competitor’s compensation and benefits package. With a PEO, it’s possible to offer more attractive benefits packages, including insurance and training opportunities.
Human Capital Managament as an outsourcing opportunity can be beneficial to companies whether they are small or large.
Bosnia and Herzegovina has available firms that are willing to provide low cost/high-quality human resources management. The standards are high, and the services offered are ready to be exported to the EU and US markets.
Restart can help match you with domestic companies, and provide the best, customized solutions. Just follow the steps and tips in this article, and you’ll be all set to outsource your finance department.Once you have the right service provider and the right set of tools, you’ll enjoy all the benefits outsourcing can offer you before you even know it!
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