How to Reduce Costs in Your HR Department

Human resources is undoubtedly a vital element to the proper functioning of your business, but because it doesn’t directly produce any profits, it can be a significant drain on your finances. While it makes sense for all departments to cut unnecessary costs, HR in particular needs to retain trim and tidy expenses for the sake of the business. Before it becomes an issue — before you need to take drastic measures to maintain financial stability — you should take the following measures to keep your HR costs low.

Shop Around

The tools and programs your HR department uses right now aren’t the only options on the market. It’s incredibly likely that you can find similar, if not identical, options from other vendors. In fact, any time you work with a vendor, you should consider setting up a bidding system to encourage competitively low prices.

However, when you shop around it is important that you compare apples to apples; that is, you cannot weigh a platinum-level benefits program against a bronze-tier from another provider and expect equivalent pricing. By doing this, you risk paying even more than you currently do — and worse, paying more for less than your HR department needs. Thus, you should shop around, but you should do so mindful of your HR team’s needs as well as those of your greater workforce.

Embrace Technology

Time is money, and technology usually saves time. If your HR department is still operating off pen and paper or even handcrafted Excel sheets, it’s likely they aren’t being as efficient with their time and energy as they could be. There are dozens of online systems and software dedicated to solving HR problems.

Still, it is possible to waste money on technology, too. You don’t want to overburden your HR staff with undue bookkeeping and bureaucracy. Therefore, before you purchase a new program for HR, you should ask your team (and yourself) the following questions:

  • Does this program take less time to manage than it would take to complete the task manually?
  • Does this program offer specific features that my HR department needs?
  • Does my HR team need exhaustive training to use this program?
  • What is this program’s pricing structure? Are you charged per device? Are there additional fees for support or upgrades?

Consider Outsourcing

Technology is well and good, but if tech solutions don’t provide the services you need, you might turn to outsourcing. In fact, six out of 10 businesses already outsource one or more HR functions, such as payroll, benefits administration, recruiting, and training. Growing small businesses typically find that they need the resources of a larger HR department but cannot support the expense — so they turn to human resources outsourcing organizations like PEOs and ASOs. HR services providers have the necessary tools and expertise to complete time-consuming tasks with less effort, and they free your HR staff to complete more pressing responsibilities, like conflict management and business development.

Reduce Risk

Employee theft and fraud occur more than you might expect, even in the HR department. Taking efforts to mitigate workplace risk could save businesses a collective $85 billion, according to the Harvard Business Review. Unfortunately, the best way to reduce risk is to hire trustworthy employees, which is easier said than done. Other methods of reducing employee theft and fraud include:

  • Supervising employees closely. When supervision is lax, theft rates go up.
  • Separate the management of purchase orders. The payment, receipt, and preparation of purchase orders should be handled by different employees.
  • Perform informal audits. Your internal audits should be unannounced and unscheduled to catch thieves unawares.
  • Install security systems. You should already have digital security monitoring employee computer usage, but you might also add physical security, such as NFC and cameras.

Eliminate Programs

If your employees generally don’t use certain programs, it doesn’t make sense for HR to continue offering them. In recent years, many businesses have cut voluntary benefits, such as long-term care insurance, life insurance, and vision and dental insurance. You can determine which programs are less-than-necessary by distributing an employee survey and comparing your results with usage rates. You might also consider cutting down on parties and events — though this will be a less popular solution all-around.

Go Green

It shouldn’t be surprising that the less waste you produce, the less money you waste. Your HR department can institute several green, cash-cutting solutions, including:

  • Using post-consumer waste paper and paper products.
  • Transitioning to a paperless environment altogether.
  • Installing CFL or LED lights.
  • Allowing employees to telecommute on certain days.