Running a small business is no small feat. Entrepreneurs and business owners must juggle multiple responsibilities, from managing operations and customer relations to ensuring financial sustainability. One critical area that often gets overlooked is Human Resources (HR). Many small businesses in Gauteng struggle with HR functions due to limited resources, lack of expertise, and ever-changing compliance requirements. This is where outsourcing HR can be a game-changer.
The lack of HR systems and controls for SMEs has been topical – particularly in the second half of 2024 when the Department of Employment and Labour began an aggressive crackdown specifically targeting the hospitality sectors. The initial blitz saw over 2500 inspections conducted, R10m in fines issues and these inspections have subsequently been expanded to the logistics sector.
Ask yourself – are you ready for a Department of Labour inspection?
A simple cost-benefit analysis
According to research from PayScale, the average Human Resource Manager in South Africa costs around R405 000 per year (R33 750 per month). An outsourced HR solution can provide you with a range of experts looking at labour matters, recruitment and payroll management at a lower cost as opposed to a fixed cost base.
The Challenges of Managing HR In-House
1. Payroll and Employee Benefits Management
Processing payroll, handling tax deductions, claiming the Employment Tax Incentive (ETI), submitting COIDA and Workmen’s Compensation submissions and managing employee benefits can be time-consuming and prone to errors if not handled professionally.
Outsourcing these compliance functions to an HR partner can free you up to run your business.
2. Compliance with Labour Laws
South African labour laws are complex and ever-evolving and business owners will struggle to stay up to date with Department of Employment and Labour news updates.
Small businesses need to comply with regulations such as the Basic Conditions of Employment Act (BCEA), Employment Equity Act (EEA), and other sector-specific legislation. These challenges are further complicated by poorly developed employee contracts and labour policies which may not comply with existing legislation.
Failure to comply with this legislation can result in legal penalties and reputational damage.
Our team members are a combination of Human Capital and legal professionals who can assist you in de-risking your operations.
3. Recruitment, Remuneration and Talent Acquisition
Based on our experience, even by utilising technology-driven solutions to narrow down applications, the average job listing will receive between 75 and 120 applications. In fact recently, we saw a mid-level accountant role receive over 450 applications.
Many small businesses lack the resources and expertise to manage recruitment effectively, leading to business owners and key team members being overwhelmed in the process.
This challenge is further exacerbated by not having a view of current remuneration trends in an industry and structuring packages.
Outsourcing this service means that the business owner can focus on their primary business activities, remove recruitment biases and introduce new skills and talent into organisations.
4. Performance Management and Disciplinary issues
If we analyse website data and keyword trends, a standout phrase in the South African HR ecosystem is “unfair dismissal”. Many small businesses do not follow the correct processes and procedures leading to costly terminations and time spent on disciplinary issues or at the CCMA.
It is tough enough running your own business without having to worry about these distractions.
Three Benefits of Outsourcing HR
1. Cost-Effective HR Solution
In South Africa, hiring a full-time HR professional can be costly, especially for small to medium-sized enterprises (SMEs). The average salaries for HR professionals according to PayScale vary depending on experience and role:
- HR Officer: ±R20,000 per month
- HR Manager: ±R45,000 per month
Beyond salaries, businesses must also cover additional costs such as employee benefits, training, HR software, and office space, which can push the total expense significantly higher.
By outsourcing HR functions, businesses can reduce these costs. Depending on company size and required services, outsourced HR solutions typically range from R5,000 to R15,000 per month, making it a far more cost-effective option than hiring a full-time HR team. Instead of paying a fixed salary and overhead costs, companies only pay for the services they need, potentially saving 30% – 60% on HR expenses.
2. Compliance and Risk Management
Staying compliant with labour laws is crucial to avoid legal disputes and financial losses. With evolving legislation like the Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA), businesses risk costly penalties if they fail to comply. HR outsourcing providers help mitigate these risks by ensuring businesses follow proper procedures.
Labour disputes can be expensive, with CCMA compensation awards reaching up to 12 months’ salary. Legal representation costs at the CCMA start at R7,000 for the first day of arbitration, with additional expenses from lost productivity and reputational damage.
By outsourcing HR functions, businesses gain expert guidance on contracts, disciplinary processes, and CCMA representation, reducing the risk of legal disputes. With outsourced HR services costing R5,000 – R15,000 per month as mentioned above, companies can avoid unnecessary legal costs while staying compliant and focused on growth.
3. Access to HR Expertise and Best Practices
By outsourcing HR, small businesses gain access to experienced HR professionals who stay up to date with labour laws, industry trends, and HR best practices, ensuring compliance and efficiency. Many small businesses lack the resources to hire in-house HR specialists, making outsourcing a cost-effective solution for expert guidance on recruitment, employee relations, performance management, and workplace policies.
Outsourced HR providers regularly attend industry conferences, legal workshops, and HR industry events, such as those offered by industry experts including CHRO, BEE123 and the HR Indaba events, to stay informed on the latest legislative changes and emerging HR trends. This ensures businesses receive proactive, informed advice on structuring policies, handling disputes, and fostering a productive work environment.
With HR experts implementing customised policies aligned with best practices, small businesses can improve compliance, reduce risks, and enhance employee satisfaction, all without the overhead costs of an internal HR team.
How Decusatio Human Capital Solutions can work with you to run an effective HR Solution:
At Decusatio Human Capital Solutions, we specialise in providing tailored HR solutions for small businesses in Gauteng.
Our services include:
- HR compliance and policy development
- Recruitment and onboarding
- Payroll and benefits administration
- Employee performance management
- Skills development and B-BBEE compliance support
If you would like to setup aa meeting, please do not hesitate to contact us or come and meet us at our offices in Rosebank in Gauteng.