How to curb business costs – Not HR initiatives in summary:
With businesses looking to rein-in spending, here’s how you can maintain precious HR initiatives:
- Balancing cost-cutting with HR impact – Reducing business expenses is essential, but cutting HR services too deeply can have long-term negative effects on employee engagement and productivity.
- Strategic ways to save – Businesses can lower costs without sacrificing HR effectiveness by streamlining processes, leveraging technology, and outsourcing non-core tasks.
- The value of HR investment – Maintaining strong HR initiatives helps attract and retain top talent, improve workforce efficiency, and support overall business success.
As the current financial year draws to a close, HR teams are under pressure to trim costs and make every pound in next year’s budget count… and with good reason.
2024 wasn’t exactly a boom for the British economy, but it seems 2025 could be even more turbulent: with worries of trade wars and economic slowdowns weighing heavy on the minds of business leaders. With so much uncertainty in the air, many organisations are now locking down their spending for the year ahead, and HR teams are bracing themselves for tighter budgets and even tougher decisions.
Faced with demands to reduce spending, it may feel as if the easiest option is to abandon the new HR initiatives you’ve got planned for the year ahead. You reluctantly agree to put new training projects on hold, delay recruitment, and maybe shelve plans to implement a new HR system.
On the surface, cutting back in that 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. After all, HR plays a crucial role in keeping the business running: engaging employees, maintain workplace wellbeing, attracting top talent, and driving performance. Cutting HR too deep could cost more in the long run… and that can be bad news for everyone!
So, how can you keep your HR initiatives on the go when financial belts are being tightened?
Stick to your guns
First off, HR is not an overhead or merely another cost centre, 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, so don’t give up on it!
Educate the business
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, even though remote working is commonplace, many big businesses are focusing on a return to on-site working, and business-related travel is still a huge expense. Could face-to-face management meetings or classroom-based training be replaced by online alternatives, at least some of the time? After all, we managed just fine during the COVID-19 wilderness years!
Also, how much are departmental heads spending on recruitment or on contractors? Could they make savings by internal hiring or promoting from within, sharing resources with other teams, working directly with universities or colleges to attract graduate talent, 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 on their spending 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, and cement your place in the c-suite.
Focus on the benefits of your HR initiatives
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 fill vacancies, hold on to key talent, 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 several 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 to be more scalable, flexible and cost-effective are now commonplace. Plus, many are also adopting AI-driven technology to make HR teams even more efficient. They’re 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.
Kim Holdroyd
HR & Wellbeing Manager
Kim Holdroyd has an MSc in HRM and is passionate about all things HR and people operations, specialising in the employee life cycle, company culture, and employee empowerment. Her career background has been spent with various industries, including technology start-ups, gaming software, and recruitment.
