There are various ways in which a Human Resource Head can reduce HR costs or can keep the cost to a bare minimum as per industry standards while improving quality simultaneously.
When the HR Head thinks of reducing costs during a period of recession, it can cause unnecessary panic in the organisation. It’s imperative for HR Heads to keep things in control in the first instance and keep the department in profit. Downsizing the team should not be the only option. Rather, it should be the last option. Regular monitoring of the return on investment is the best way to keep a check on reduced costs.
Some of the ways to cut costs are:
Payroll outsourcing
Online payroll outsourcing can ensure excellent payroll functionality, industry best practices and reporting. It will not only reduce processing time and effort through the use of ‘Online Payroll Software’, thus saving the costs of processing per payroll head and improving profits, it will further reduce the work of HR as they can extract more sophisticated reports in accordance with effective legal compliance and anytime/anywhere access to payroll reports, pay-slips with higher accuracy, reduced manual burden, reduced errors, more business more revenue and improved margins.
Redesign and reviewing HR policies
The HR Head should work as a strategic Business Partner. In order to make any change, the HR Head should understand the firm’s overall business. He/she should review all the internal employee-related policies and, if necessary, update the current policies into contemporary HR policies in the interest of the organisation. This can be done by developing a business case of redesigning or transformation, by understanding the business gaps, developing clear outcomes and a rationale. It is important to make management understand the difference between current policies and the impact of redesigned polices on the organizations in terms of cost and time.
Vendor reviews
Consolidate all the vendor lists and check if they are preforming up to your expectations and if they are charging market prices. An annual review can be done. Vendors should be assessed on the parameters of solutions, price stability and reliability. Vendors should also give advance notice of any change in price, risk or relationship.
Hiring costs
HR Heads can focus on various ways to reduce the hiring cost. Some of the most popular ways are employee referrals, taking advantage of social media like LinkedIn, building a talent pool, in-house software, correct advertising of the job or advertising the correct job description, optimisation of the in-house career portal, digital interviews or online recorded interviews. HR can also use good application tracking system and host networking events, HR Heads should also undertake police checks, educational or credit clearance checks to hire the correct person in the first place.
Eliminate unnecessary training
Unnecessary training costs can be reduced or trimmed. HR should emphasize in-house training or in-house training materials should be easily available for employees online and on a 24/7 basis. There should be no frequent need to call in outside trainers. HR can also evaluate the online training options available. Training should be given to senior professionals and they can further delegate to their subordinates. There should be enough time between meetings and no two meetings or training should overlap.
Succession Planning
Succession planning is also one of the most effective ways to reduce costs, as senior level positions from outside the company are difficult and expensive to fill. Companies have to advertise, pay recruitment agencies and arrange multiple rounds of interviews. Some companies even offer a joining bonus to attract candidates from other companies. Companies can invest in succession planning that involves internal movement or promotion. HR can identify high potential candidates and emphasis should be on better employee engagement and internal growth.
Performance Management
HR should use good automated performance management software which will help to reduce unnecessary operational costs as this will stream line the process. As a result, HR will get clear feedback where there is room for improvement, be able to gauge staff performance and spend on the right training or employee development.
Use of Artificial Intelligence (AI)
Artificial intelligence (AI) can be implemented to do the exact, or better, work than humans. The benefits of AI are speed, accuracy, improved payroll calculations and functions, reduced cost and stability. With the use of AI, cognitive work can be done more easily. AI can help HR to do repetitive work or low value work at reduced cost, employee master data can be extracted and used for multiple report generation, AI would also help to track the employees progress.
Finally, there are multiple ways to reduce HR costs. HR should have a very clear strategy on succession planning, use of AI, implementation of performance management tools, hiring costs, training and development programmes and use of payroll software. HR Heads should not be afraid to implement HR strategy. Rather, they should look forward to implementing new changes in the company and the HR strategy should be aligned with the business strategy.
Piyush Thareja is a Certified Practitioner Human Resource (CPHR) of the Australia Human Resource Institute and currently works as Director at Brooks Consulting Private Limited, www.payrollservicesindia.com.
