Controlling HR Cost: 4 Steps You Can Take Right Now
Managing the HR cost associated with operating a business can be significant. From the rising cost of healthcare to basic HR administration costs, companies are facing a significant price tag to attract and retain top talent. However, strategic planning can help minimize HR costs and allow companies to reinvest in other areas of their business. Here's a closer look at four steps you can take right now to help keep costs down:
Invest in hiring and retention
One of the biggest HR expenses relates to talent: sourcing, recruiting, and retention. By investing in hiring the right people, recruitment costs go down over time and having new hires that are the right long-term fit with positions can reduce recruiting costs. Focus on this area can be increased by building more diverse sourcing programs, incorporating background screens for better candidate fit, and using technology to help assess the best individual for the job. In addition, investing in employee retention initiatives and programs may ensure that once you've hired the right people, they are less likely to leave for other opportunities. Recruiting and training new talent is expensive; focus on getting it right and keeping your existing team happy.
Evaluate your benefits
Healthcare costs and other benefits are driving up what companies spend on HR. As companies grow and the cost of benefits increases, it's smart to evaluate whether you're spending company funds in the best way possible. For example, is your benefits spending aligned with your employees' priorities? Many companies evaluate their benefits and find that certain programs or perks are underleveraged and can be cut. It's also helpful to look at who is providing and administering your benefits. Comparable alternatives to health plans, employee assistance programs, payroll support, and other core human resources related expenses can often be found.
Streamline HR services with technology
Investing in HR software can help manage costs. For example, applicant tracking systems can streamline the recruiting process, use automated questionnaires to screen individual applicants, and automate candidate communications. Tools such as time and attendance, employee self-service portals, and management reporting portals can eliminate unnecessary staff time spent on administrative tasks and free up your HR team to focus on high-value activities.
Administering complex human resources programs can be expensive. Consider the time and effort required to oversee an open enrollment period or to comply with the reporting related to managing a retirement plan. Many companies are cutting costs by outsourcing administration of their routine programs. One option many small businesses explore is joining a Professional Employer Organization (PEO). A PEO is an organization that can help companies outsource HR, provide access to and administration of benefits, and often expand the benefits offered to employees.
Controlling the HR cost of running a business takes strategic planning. By focusing on hiring the right people, retaining your team, investing your benefits dollars into high impact areas, and using technology and outsourcing to keep costs down, it is possible. Start with a systematic assessment of your HR budget today, and you'll be well on your way to eliminating unnecessary HR costs.