In the volatile economic climate now pervading the Zimbabwean economy it might make sense to outsource non-core activities wherever you can.
Apart from the current complexities of staffing your business there are many sound economic and strategic reasons to outsource.
Specifically, outsourcing your payroll offers:
Confidentiality: By having salary, wage processing and HR administration done offsite;
Reliability: Producing your payroll the way you want it done and ensure that any legislative changes are incorporated in the payroll on the required dates;
Continuity: With a team of professionals and a complete disaster recovery resource, you will never be thrown into a crisis when your human or technical payroll and HR resources crash;
Cost effectiveness: Can save on staff, technology and administration costs.
Specifically, outsourcing your HR function offers:
The opportunity for HR executives to focus on strategic and high value additions to the business.
Confidentiality: Data is kept offsite but with easy and secure access.
Reliability: Administrative activities are carried out by professionals using reliable computer systems.
Cost effectiveness: You can save staff costs, technology and administration costs.
Outsourcing is a strategic alternative to organisations who find themselves having to manage and fund non-core activities that frequently take up considerable management time and yield no business return on investment. Paul Harman’s Strategy Matrix helps managers make outsourcing decisions
As can be seen in this diagram (on the right), where the strategic importance of the activity is high, Harman recommends not to outsource but where the strategic importance is low, one should consider outsourcing as a business option.
A tale of the value of outsourcing
Henry Chademana (not his real name) retired from the police force and saw an opportunity in the security sector.
He established his business specialising in electronic alarms, CCTV, electric fences and electronically called reaction teams.
Aside from the electronic equipment and expertise he needed a small fleet of vehicles. It would be a simple addition to his business to set up his own vehicle workshops and take on a specialist to maintain his small fleet.
The business would also provide motor repairs and maintenance services to the public to add a small additional revenue base.
For a few months this seemed to be working well.
With a staff of 25, Henry realised that he needed to acquire his own specialised payroll system, which required another member of staff to manage the salaries and wages.
He discussed the idea with his wife, Belinda and they agreed that she would come in when needed to manage the salaries and run the payroll.
The business was successful and over a two year period Henry’s customer base grew exponentially. This meant there was a need to take on more staff and acquire two new vehicles.
One day Henry visited the vehicle workshop and found three private vehicles under repair while one of the company vehicles was waiting for attention.
He was visibly angry and took his young technician to task. The incident ended up in acrimony and the technician resigned in a huff, leaving Henry to find a replacement urgently.
Henry was forced to close his workshop and had to outsource repairs and maintenance to a nearby motor service business.
A month later Belinda and Henry decided to take a well-deserved holiday to the United Kingdom where their young daughter, Leanne was living.
Leanne had recently given birth to her first child and the couple desperately wanted to be there for a while.
They made the necessary plans but then wondered who would run the payroll while they were on holiday?
Conclusion: Henry and Belinda’s story is a perfect example of the value of outsourcing.
By designating certain responsibilities to a third party, they could solve their problem and potentially boost their business in the long run.
What are you going to do to save costs and enable your management team to concentrate on your core business activities?