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With today’s volatile economies and hyper-competitive economies, businesses are under immense pressure to reduce costs and increase profitability.
For human resources teams, this challenge is multi-faceted as they are not only tasked with cost management or cost optimisation (without reducing headcounts), but are also responsible for boosting productivity, employee morale and engagement. Another challenge that HR leaders often face is that the return on investment of such budgeting activities is not immediately apparent.
This is why the HR team should be proactive in preparing progress reports to update the stakeholders, as well as highlight any challenges and opportunities along the way to provide reassurance.
5 cost effective HR measures to increase human capital
For the HR industry, cost savings is a long game. Here are five cost reduction strategies that you can implement while positioning the department as a revenue-generating unit.
1. hire and retain star performers
An organisation’s ability to attract, hire and retain top talent has a direct impact to compressing costs.
Employers take on average, three months to fill a job opening. If there is nobody doing the job during those three months, the company is already losing out on work productivity.
A bad hire however, would cost the company 10 times the salary of the outgoing employee, as work performance and employee morale would be negatively affected by a bad hire. Some employers risk suffering an exodus of great talent when they make a bad senior executive hire who does not fit the job or organisation.
HR teams must plan ahead to prevent facing such issues and save HR costs. This means being able to build a robust talent pipeline, speed up the talent recruitment process as well as accurately predict red flags. To do so, companies are turning to HR technology like robotic process automation (RPA), machine learning and artificial intelligence (ML/AL). Companies can turn candidate screening, skills assessment and performance monitoring into highly automated and intelligent processes to quickly and more effectively attract and retain their star performers.
2. prioritise training and mentoring
Companies tend to not invest in training and development or mentorship programmes as it is relatively difficult to place a numerical value on the outcomes. It is also often overlooked, as managers and employees are already bogged down by their day-to-day work and last-minute requests.
When employees acquire new skills and knowledge, they can deliver better quality work or produce desired results more quickly. They would also be more encouraged to think creatively and critically, which increases the possibility of them finding new and innovative solutions for existing problems. Not only does a robust training and development strategy help employees be better at what they do, it also allows employers to exercise more flexibility for their internal talent mobility programmes.
3. automate repetitive processes
After 2020, it’s nigh time to embrace change and innovation. Yet technology inertia, fear of job loss and lack of expertise are some of the common reasons behind the lukewarm adoption of automation by organisations. On average, businesses are found to be missing 50% of all automation opportunities.
HR technology solutions are not just affordable and scalable, they also free up resources and enable HR professionals to become more effective and impactful business partners. Technology tools like robotic process automation (RPA) can automate and digitise repetitive processes. When done right, RPA can increase accuracy and speed as well as eliminate the cost of having to deal with errors and process delays. More specifically, it provides up to one-third reduction in resources and expenditures.
4. promote talent mobility
It cost companies 18% more to hire external candidates than to promote someone internally for the same job. Developing talent from within is far more beneficial for employers, as these employees tend to have legacy knowledge of the business operations and are better adjusted to the organisational culture.
Companies that invest in developing a strong internal talent pipeline not only save on unnecessary HR and workforce costs. These companies will also have a stronger employer brand which enables them to attract higher quality talent from the labour market.
5. consolidate activities
Most companies offer discretionary, non-mission-critical perks like office parties, team outings and expense reimbursements. However, these employee engagement activities account for a significant portion of operational cost.
Rather than eliminating these benefits which can upset employees, HR leaders can partner with different business units to consolidate some of these activities such as combining training and team outing days. This will give employees more opportunities to interact with one another, build their internal network and collaborate on projects in the future and eventually improve the employees experience.
finding a cost strategy that works for your business.
Business partnering is a rite of passage for many human resource professionals who seek growth in their careers. It is important for HR professionals to be able to see the big picture so that they can drive initiatives to support business stability and growth.
This would mean developing highly-targeted and cost-effective HR strategies that contribute to strengthening the organisation’s ability to attract and retain high-performing talent - without compromising on culture.
If you are looking for an HR partner to help you with the key challenges in attracting and retaining good talent for your business, please get in touch with us. Check our HR services and let's bring your workforce to the next level.