How to Identify Remove Hidden Costs of Human Resources Management
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How to Identify and Remove the Hidden Costs of Human Resources Management

How to Identify and Remove the Hidden Human Resources Management Cost

Human resources management is a key part of your organization, as it helps to facilitate the hiring, managing, payment, and retention of the employees that carry out the essential functions of your business. It carries with it a fairly large price tag, however, and can be associated with a lot of common, costly fees.

What are the true costs of HRM and how can your business lower expenses?

Most businesses assume that these costs are just part of running a business and handling the administration budgets of human resources, but more organizations are realizing that with technology and strategy, they can eliminate many of the costs associated with human resource management.

What are the hidden costs of human resources management?

The objectives of human resource management are to support and grow the human capital within your business. From hiring and training to benefits administration and employee engagement, HR has a lot of moving parts and costs associated with each of them. Here are some of the ways that HR spends its budget:

  • Hiring
  • Training
  • Onboarding
  • Payroll and benefits
  • Handling privacy and compliance issues
  • Human resources management and other employee salaries

These are all necessary parts of a functional HRM team, but are the costs static? Here are some ways to reduce or eliminate human resources management expenses.

Better technology

This has become one of the most prominent ways that businesses are saving money and reducing costs in their HRM operations. When HR employees don’t have to constantly switch back and from different processes and programs (from recruitment software to payroll management to training platforms, for instance), employee productivity increases. Modern tools like AI-driven recruiting and integrated enterprise systems that help run, store, and manage HR tasks like employee files, personnel reviews, and employee feedback help HR teams handle their work more efficiently, saving time and money.

Time management

One type of training that HRM teams should invest in is time management training. Too many hours are spent going through emails or trying to manage annual tasks in addition to daily tasks (like filing and submitting new hire paperwork and managing recruitment postings along with employee insurance reenrollment). Learning how to balance and manage daily responsibilities with other competing priorities is a big part of reducing annual costs in most departments, including HR. In addition to being extremely beneficial for the output and productivity of human resource management departments, they can turn the training they received into an internal education opportunity that can help drive up productivity for the whole organization.

Designated positions

Many HRM teams employ someone with the title “HR generalist.” This is catch-all term for someone who’s job it is to manage all the miscellaneous or non-specialized tasks in HR. While some teams need this position, others would benefit from more specialized roles. An HR generalist can’t be the designated person for payroll and benefits administration if they’re not the person also in charge of dealing with those aspects of HR. While your HR team should have a good idea of what’s going on across the department and who handles what, specialized roles and designated positions can help eliminate the back and forth that is a common time suck in HR.

In other cases, no position is the better solution. If you’re a small business, would it make more financial sense to use a hiring agency or staffing company to help fulfill your recruitment needs instead of paying salary and benefits to an internal employee? Would signing a contract with a payroll and benefits company help free up time and money in your business?

The first step to understanding where to save in your HRM processes is understanding what’s necessary as well as what each process costs. From there, you can work on adding in new technologies, trainings, and processes that can save you money over time.

Marianne Chrisos
Marianne Chrisos
Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer as a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.
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