How to Reduce Costs in Your HR Department

There’s no doubt that human resources (HR) is worth investing in for businesses. A slick HR department can help attract, train, motivate and retain talent, as well as negating conflicts and identifying future resource needs. But just like any other department in a business, HR needs to add more value than it costs.

3 constructive ways businesses can reduce HR costs

That point is especially true in the current economic context, with over 250,000 small businesses starting 2021 at serious risk of collapse. Cost-cutting can ring internal alarm bells if handled poorly – but there are several ways to make HR more cost-effective without losing functionality.

Automate key admin tasks

HR roles often come with a large amount of time-consuming admin that could be simplified through technology. Setting up HR management software can reduce the workload across multiple areas of the discipline, providing a significant return on investment.

Packages vary depending on user numbers and functionality needs, but a typical software solution will take care of candidate tracking and employee on and off-boarding to make recruitment slicker. Over the course of multiple hires, the time saved could be staggering.

HR software also provide employees with autonomy by allowing them to manage their own annual leave, expenses and training, as well as collecting a variety of performance data.

Strengthen your hiring process

No HR department sets out to make objectively bad hires. But if your hiring process is rushed or overlooks aspects such as cultural fit, your business could soon overspend on replacements. High employee turnover can also impact team morale, leading to low productivity and further departures.

Review your recruitment process as a whole and consider what’s gone wrong with past hires. Personality and cultural fit are often neglected in favour of professional skills, but a team of like-minded, passionate employees will always outperform a disjointed group of individuals.

You could also find gaps in your role descriptions if certain roles have evolved over time, so make sure to involve current staff in the hiring process too.

Refine your training programs

Learning and development is an all-too-easy target when looking to cut costs. Training existing staff should instead boost productivity, as well as reducing employee turnover, by providing people with clear progression paths.

Your training still needs to offer tangible value however, so review your current provisions and how well your employees engage with them. There are lots of high quality and low-cost online resources such as LinkedIn Learning which could be more practical than in-person courses.

You could also encourage your internal experts to deliver training sessions themselves and share knowledge around the team this way. Over time you’ll have a collection of presentations and guides, all developed in-house, which could even become a selling point for your business.

If your HR department isn’t offering the value that it should, follow these tips to cut costs and boost effectiveness.