May 19, 2020

HR in a downturn: 7 ways to save costs

Given the events taking place due to coronavirus, businesses are faced with the task of cutting back spending where possible. But where do you cut back? And, how much? What stays and what goes? As someone that works in HR, I can’t stress enough how important it is to keep your human resources alive – however, I understand, some cutbacks are unavoidable. So what should you do if you have no other option to reduce spend when it comes to your HR strategy? We explore seven ways in which you can downsize those HR costs and still have an effective human resources team.

1. Look for duplication

One of the easiest ways to save money in any business? Identify and eliminate any duplication across all departments. This could be duplication of roles, duplication of processes or really any kind of double up. Often, we find that duplication happens when tasks and processes are done manually rather than relying on technology or some sort of automated programming. In other cases, it’s because there are just too many people and too little communication. McKinsey found, for instance, that HR departments often duplicated certain activities simply because they had several layers in the organisation doing similar things. The consulting firm concluded that it was often easy to remove some of these levels with little-to-no strategic risk.

2. Redesign your processes

It’s quite common for businesses to change but for processes to stay the same. It’s also common for business processes to grow organically without any real thought as to whether these human resources processes are efficient at all. How long has it been since you looked at your HR processes? Readjusting unwieldy processes can be an easy way to keep costs down and now, might the right time to apply the metaphorical blowtorch to each of your organisation’s processes. And, here’s a little HR tip – I find it’s a good idea to work backwards: start from the result a process is trying to achieve and then chart the simplest, most efficient path to getting there.

3. Maximise your HR roles

With the right people in each HR role performing the right tasks, you’ll find that teams work more effectively and efficiently. It’ll also produce better results at a lower cost. Take a look at who’s doing what within your HR department and observe how they’re doing it. Ask yourself the following questions – are your people suited to the tasks they’re performing? (A good psychometric assessment could help determine the answer here) and, are you using skilled and expensive people to perform work that someone cheaper could do? Matching the right people with the right tasks will improve your HR output and could potentially work wonders on your bottom line.

4. Invest in better HR technology

Implementing the right HR technology won’t just make teams more efficient, it’ll help you reduce the number of tasks you need to perform in the first place. Many processes we had to do manually just five years ago can be automated. For comparatively little cost, specific processes can be streamlined and improved through robotic process automation (RPA). Payroll, new employee onboarding and compliance are all prime areas for this exciting wave of technology.

5. Interrogate your spending

It’s very easy to spend money on things that you and your teams don’t get full value from. It’s costs like subscriptions you no longer use or training that serves little purpose. Even staff or consultants whose values are not commensurate with the amount you pay. Look at where the dollars are going in and out and ask yourself, ‘am I getting the most out of this spending?’.

6. Build effective compensation packages

When there’s a disconnect between how someone is paid and their productivity at work, you’re likely to be spending money inefficiently. An effective way to save money can be to better match your HR professionals’ performance with their pay. Here, reviewing KPIs to match your business goals and shifting from relying only on base salary to bonuses can bring about better results for your HR team. You can read more about how to build better employee incentive programs.

7. Outsource your HR

Have you considered utilising a virtual or custom HR service? Outsourcing some or all of your HR capabilities can certainly cut costs while delivering more efficient HR outcomes. You’ll only pay for what you use and access a wide range of human resource skills – everything from the administration through to strategic planning – without necessarily having to employ full-time staff in each role. By outsourcing, you may be able to get by with a reduced HR team, saving you thousands in salaries and superannuation. In fact, you may be able to employ skeleton HR staff or even no dedicated HR team at all. It all depends on your business and how it’s structured.

It’s important to maintain some form of HR function within any organisation – even when times are tough. Human resources services are for the people and a necessary element to business success. If you’re facing financial difficulty or need to keep your costs down, look at altering your HR function, not getting rid of it. If you have any questions regarding the tips I’ve mentioned or you’d like to discuss how you might be able to virtualise your human resources, get in touch. We can certainly look at custom HR packages to suit your business and budget.

say hi to our author

Merilyn founded Catalina Consultants in 2012 on the belief that all organisations, regardless of size, should have access to top quality bespoke HR services. She enjoys working closely with her clients and believes that the best results are built on relationships of rapport, trust and authenticity. Growing up, Merilyn had her sight set on stardom and dreamed of becoming an actor. She also sang and played the piano, but ended up studying accounting and HR. Whilst she hasn’t won her Grammy just yet, she still loves a good karaoke night. Merilyn loves to travel with her family, with South Africa being one of her most memorable destinations.

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