The contemporary way of human resource management: Digitalization and functional outsourcing

September 17, 2021

Functional outsourcing and digitalization: An integrated human resources solution for businesses

To survive in challenging times, businesses must be able to make the right decisions at the right time. Taking these smart decisions requires a good understanding of the business environment and the key stakeholders of a business. In addition to focusing on customers, companies need to have a thorough understanding of the critical foundation of their business - The employees.

“To win the marketplace, you must first win the workplace.” - Doug Conant

To win the workplace, management must invest significant time and resources into nurturing their employees. Every company has its own unique structure and operating model. It needs to ensure that the human resources (HR) are streamlined to serve its specific requirements. A professional team of HR specialists can help assess and adjust resourcing requirements based on present and future business plans.

 

Tackling HR challenges during rapidly changing business climate

Due to pandemic increasing market volatility globally, many companies have had to revise their recruitment plans. On one hand, companies in economies facing a downturn have had to put a freeze on hiring or downsize their existing workforce. On the other hand, technology firms have seen a rapid uptick in the growth of their businesses. Handling these sudden changes with limited resources can be quite challenging for In-house HR teams.

To overcome these challenges, many companies are opting to outsource time-consuming administrative tasks, such as recruitment and payroll processing, to professional employer organizations (PEO). PEOs take away the burden of administrative tasks from the company and enable the HR teams to focus on employee development, training and long-term strategic workforce planning.

 

Benefits of leaving HR processes to the experts

Companies can benefit greatly by outsourcing the HR process to an experienced PEO. Through co-employment, a PEO becomes the manager of record for tax and legal purposes, while providing employee benefits packages under its own name. Although the PEO is the employer on record, the company gets to direct the employees in their day-to-day tasks. This allows management to focus on the business, without the stress and distraction of managing admin tasks.

The PEOs assist in discharging the management of payroll services, while providing access to better and cheaper benefits for employees through their scale. They optimize the recruitment processes and   manage the process end to end - from determining job requirements to candidate shortlisting, interviews and employee onboarding. Additionally, PEOs can assist in managing the company’s international operations in locations where the company doesn’t have a local entity. Through their knowledge of local employment and payroll regulations, the PEOs bring added benefits of ensuring timely and appropriate compliance.

 

Technology to optimize the HR Management Process

Technology has become an indispensable part of every business and digitalization has become a global trend. Companies of all sizes across industries are now actively pursuing digital transformation, including for digitalization of their HR processes. We are witnessing, both HR teams as well as PEOs leveraging technology to optimize the end-to-end HR management process.

This digitalization of HR processes is particularly significant in the case of three main processes involving screening candidates, conducting interviews and cross border payroll management.

  1. Optimizing Screening Process: For any open position, HR teams have to handle several dozen, if not several hundred, applications from various sources. Companies have also seen a further increase in number of applications in places severely impacted by the pandemic. By using digital solutions for resume screening, HR teams can narrow down the number of prospective candidates. Evaluators can input specific criteria and keywords into the system, and the digital solutions are able to easily eliminate candidates that do not satisfy the criteria. The evaluators can then efficiently review the remaining pool of eligible candidates and present the top candidates to the hiring managers for interviews.
  2. Overcoming Social Distancing through Video Interviews: In light of social distancing measures due to the pandemic, conducting face to face interviews has become a challenge. To overcome this, video interviews have become the new normal for hiring managers. Besides overcoming challenges of social distancing, video interviews also provide opportunities to overcome geographical barriers in accessing a bigger talent pool globally. Additionally, hiring managers can opt to record the interviews and be able to review the candidates again, post interview. Video interviews also provide benefits to applicants, saving them time and effort in commuting to the office for interviews. In particular, video interviews make it more convenient for lateral hires, who may not be able to take significant time off from their current jobs to travel for interviews.
  3. Improving Cross-border Payroll Management: Compensation packages in different countries vary due to the differences in local regulations, labour policies and talent availability. Although multinational corporations handle cross-border payroll internally, local offices in various locations tend to use different payroll systems, making data integration difficult and time-consuming. Payroll outsourcing services are a good way to overcome these challenges. Through this service, each local office receives a payroll interface file before the payday every month. After the local offices have completed the files and uploaded them to a unified payroll system, global payroll data will be integrated and reconciled instantly. This significantly reduces the extra money and time spent on payroll management, and the need to set up a local HR team in each location the company operates in.

 

Functional Outsourcing and Digital Solutions: The New HR way

Through functional outsourcing and use of digital solutions, HR departments can focus on core functions such as employee development, training and engagement, while leaving the burden of administration to the PEO and staffing firms. The PEO can assist the company management in reviewing and adjusting their HR strategy, steering them towards sustainable growth and long-term success. Implementing a PEO strategy not only benefits the company but is also helpful for candidates who are able to find and capture the best roles suitable to their profiles. With digitalization, processes can be automated, streamlined and made efficient. Additionally, companies can leverage technology to overcome geographical and physical barriers. With sophisticated filtering software and data analytics, HR teams can ensure they are finding the best possible candidates.

Thereby making contemporary way of combining functional outsourcing and digitalization a winning strategy for both companies and the modern workforce.

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