Are there strategic ways of cutting costs in today’s business?
The answer is, YES!
Considering today’s hyper-competitive and volatile economies, companies are under continuous pressure to enhance productivity and reduce costs at all times. This challenge is multi-faceted, especially for the HR and recruitment teams in organizations as this department has to continuously manage costs, overheads, productivity boosts, employee retention, employee morale, etc. – all at the same time.
However, there are ways the HR department of your organization can help you cut costs – Retain good performers: One of the best strengths of an organization is its ability to hire and retain star employees.
For every bad hire, a company loses 10 times the salary made by a productive employee.
This is extremely critical to keeping the human costs to a minimum. This is because it takes days to find a replacement or fill a job opening and extra costs to train the new employee. Therefore, it would suffice to say that hiring a bad employee can add to the company’s overall costs.
As per a recent research, for every bad hire, a company loses 10 times the salary made by a productive employee.
“When you add up missed sales opportunities, strained client and employee relations, potential legal issues, and resources to hire and train candidates, the cost can be considerable,” says CareerBuilder CEO Matt Ferguson.
Additionally, there is an extra cost associated with training, loss of productivity, etc. Forward-looking organizations should look for contract staffing firms in order to get the best employee on board who can stay with you for a long time.
Focus on Training
One of the most overlooked aspects in an organization is training and mentoring. Efficient training can greatly help HR reduce overhead costs in the long run. Furthermore, efficient training also helps improve overall productivity and helps reduce employee attrition and turnover.
When employees at the same level receive the same training, anyone can fill in for anyone in their absence – which obviously reduces overhead costs.
Automate Regular Processes
If a company introduces and installs the right software, it can save a lot of cost in the long run. Such automated procedures can help free humans from doing manual and repetitive tasks on a daily basis. Furthermore, this also enhances the speed and accuracy of finishing a particular task. These automated processes tend to eliminate the cost of having to deal with any delays or errors.
Nonetheless, there are many concerns about automation taking many jobs away or causing technology inertia. However, contrary to such beliefs, automation will only add to more jobs across the globe. For instance, when entrepreneurs want to save money, time and energy, they automate these marketing processes, thereby cutting costs.
It is advised to firms to outsource some of the routines but high-volume tasks to freelancers to reduce cost.
Instead of getting a new hire on board and training him or her, it is more feasible to hire a freelancer to complete a project at one third a cost.
The ability of the e-commerce industry to grow by 23% year over year is never unconnected to the ability of these ecommerce business owners to outsource their delivery while they focus on product sourcing and/or marketing.
So, these are but a few ways which the HR department of a firm can take to reduce overall costs. When you are looking for strategic ways of cutting costs in your business, I recommend that you use any or all of the 3 steps of reducing cost as stated here.