October 26, 2020 | By Mark Morter
When considering cost-saving initiatives, HR team leaders and business owners must weigh the potential cost savings with the employee experience. If the employee experience dips, employees may look elsewhere for employment. Even worse, they may become disengaged and less productive. You also want to ensure your cost-saving ideas have as little impact on revenue as possible.
The following are some initiatives that can reduce costs with minimal impact on engagement and revenue.
One of the most critical human resources cost-saving ideas is to develop a cost-reduction strategy.
Oftentimes, business owners simply start cutting haphazardly without thinking about the repercussions.
By creating a cost-saving strategy that aligns with your company goals, you can ensure you have a smooth process. Creating and implementing such a strategy in coordination with your HR team helps to keep the message clear that your intention is to save money without harming the employee experience. This has the added benefit of keeping HR lean by letting your HR department know what costs are unnecessary.
Optimizing employee retention is another effective cost-cutting strategy that can improve your bottom line.
At the current annual turnover rate, the average 100-person company in America should expect up to $2.6 million per year in turnover and replacement costs. That validates what many business owners and HR teams feel — turnover is frustrating but also highly costly for the business.
Reducing turnover is one way to cut costs. Your business can increase retention without decreasing the productivity of your employees by introducing employee engagement programs. These might include:
Increasing employee engagement not only helps retention but contributes to growing the bottom line through increased productivity.
Also, maximizing employee retention helps you get through a hiring freeze when people simply aren't filling job openings. The more employees you can hold onto, the better you can overcome those periods when hiring becomes challenging.
Every business must abide by certain laws and regulations. One HR activity that trips up many small and mid-sized businesses is employee classification. The Fair Labor Standards Act (FLSA) requires that hourly employees be paid overtime and that only certain types of employees can correctly be classified as salaried and exempt from overtime.
The FLSA is clear that if you direct workers, tell them what to do, and when to do it, then they are employees and not independent contractors. Even the slightest violation of this regulation can be costly in terms of potential fines and lawsuits. Recently, an aeronautics company was required to pay its employees nearly $1 million due to accidental FLSA violations.
Ensuring your HR team is up to date on the FLSA and other labor laws give your business the best chance of avoiding such costly fines.
Effective risk management initiatives will also help give you peace of mind that your business is consistently compliant and safe from potential risk-related issues.
Lowering healthcare costs can be a great place for your business to save money. But you want to be careful not to diminish the quality of your healthcare offering. That could cause employees to become unhappy and, as a result, less productive.
Aside from changing healthcare plans, small businesses have other choices for saving money on healthcare initiatives. One of the best ways to save money on healthcare that also increases your employee engagement is with a wellness program. By offering rewards or prizes for meeting wellness goals, you can push your employees to be healthier, which results in lower healthcare costs.
Your business could also prioritize preventative care. Encouraging your employees to see their doctor for regular check-ups can help ensure they get the medical attention they need before minor issues become serious.
A Professional Employer Organization (PEO) can offer your employees better benefits at a reduced cost. Companies that partner with a PEO see a 21% savings in HR administration. Because of this and other cost savings, partnering with the average PEO provides a positive ROI while taking on many of HR’s administrative burdens.
A PEO will also guide your business through compliance and regulation. These areas are ripe for trouble. You can retain company assets by keeping your business compliant and not lose them to unnecessary fines.
When looking to save costs for your business, make sure your actions do not negatively impact your employees' experience with your company. By keeping your employees happy and engaged, they will be more loyal and efficient workers. All that leads to more profitability for your business.
By following the steps above and partnering with the right PEO, you can effectively cut costs and increase revenue.
As the National Sales Director, Mark has over 25 years of sales and sales management experience, 14 of which have been in the PEO industry. He has built, expanded, and turned around sales teams and markets. Mark is known for driving growth and revenue and has been recognized for the recruitment and development of Award-winning sales professionals.