Curbing business costs, not HR services

It’s the time of year when many HR teams find themselves under pressure to bring down costs – and commit to making limited budgets stretch even further.

Faced with demands to reduce spending, it may feel as if the easiest option is to abandon the new initiatives you’ve got planned for the year ahead. You reluctantly agree to put new training projects on hold, delay recruitment, and shelve plans to implement a new HR system.

Cutting back in this way may meet the short-term demand to balance the books, but at what cost to the longer-term success of the business?

Rather than go quietly, perhaps it’s time to stand your ground. Don’t accept that HR’s initiatives are less important than other business activities.

Stick to your guns

HR is not an overhead, it’s a profit driver. If you’re not recruiting the right people and developing their skills or watching the company’s back when it comes to managing retention, skills shortages and key legislative issues, the risk to business is huge. If you’ve identified that leadership training is needed; an extra pair of hands will prevent a meltdown in the team; or a new HR system could help you eliminate wasteful practices and boost business performance, don’t give up on it.

Educate the business

business costs

Make sure key decision makers understand the impact of the initiatives you’ve proposed. They’ll quickly change their minds when they see how expensive it is to replace someone who left due to lack of training, appropriate mentoring or limited career opportunities. Or, how much time is wasted managing HR data and processes using out-of-date systems or spreadsheets.

If you don’t have that conversation, it’s too easy for managers to make short-term decisions that don’t consider the future success of the business.

Challenge policies

Who else are you bidding against for budget? Is HR the only place where money can be saved or projects sensibly be delayed? Are there business practices that would benefit from a different approach? For example, travel is a huge expense in many companies. Could face-to-face management meetings or classroom-based training be replaced by online alternatives, at least some of the time?

How much are departmental heads spending on recruitment or on contractors? Could they make savings by promoting from within, sharing resources with other teams, working directly with universities or colleges, posting vacancies online, or by renegotiating agreements with recruitment agencies? How do salaries or retention rates stack up against companies in a similar area? Where could improvements be made?

You may not feel it’s your job to challenge other departments or established ways of doing things. However, it’s often the case that demonstrating you have a good understanding the wider business context will help put you in the driving seat.

Focus on benefits

Shifting the debate from costs to benefits is key to winning wider business support. It’s important to take the time to meet with key managers – and put your plans in terms they’ll understand and relate to. If departmental managers are struggling to hold on to key talent, fill vacancies, or keep up with the paperwork, explain how you plan to make that better. Talk through the implication of staying with the status quo, rather than adopting plan x or plan y.

If they recognise that the current situation isn’t optimal, and how much better it could be, they’ll be much more likely to support you.

Shop around

Do you research and present the management team with a number of different options. Telling the finance team that you could save xx amount if you went with option B rather than options A or C, changes the debate from whether a solution is necessary, to being about which solution is the best value for money.

There’s often an instinctive bias to believe that expensive options are generally the best. However, with technology moving so fast, and disrupting every aspect of business, it’s worth exploring different options. Whether that’s taking online training from an innovative new supplier, or evaluating HR suppliers you’ve not heard of before. Over the last few years, there’s been a revolution in the HR software space. New HR systems, specifically designed for the more agile, cost-effective Cloud computing infrastructure are now available. They are considerably cheaper to buy and significantly easier to implement, so tie up fewer resources and deliver a faster ROI.

 

So, next time you are faced with sacrificing one of your key HR projects to balance the books, take a deep breath and ask your management why they think that going to be good for the business.

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