Cost-Saving in HR: What Are the Best Strategies You've Tried?

Our management gives projects on cost-saving in all departments. I am working in the Personnel/HR department. Please guide me on what sources I can use to save money in various ways.

Automation of many routine functions such as payroll and attendance can streamline processes. Cutting the use of stationery by transitioning to digital methods can help in reducing waste and promoting a more eco-friendly work environment. Going green not only saves stationery, stamps, postage, and printouts but also reduces the environmental impact of excessive paper usage.

One effective way to reduce costs in HR is by closely monitoring employee exits and addressing the reasons behind them. By providing a fair and conducive work environment, companies can minimize turnover and the associated costs of hiring and training new employees.

Beyond just cost-cutting measures, HR should focus on creating value within the organization. This can be achieved through initiatives that enhance employee satisfaction, improve productivity, and contribute to the overall success of the business.

To begin with the cost-saving project for the HR department

As a first stage, you need to know the current or historical spending areas by the HR department. One of the areas is recruitment. So, just to take the recruitment factor, answer the questions below.

Stage 1: Data Collection

- Total recruitment last year or over the past couple of years
- Cost for recruitment (cost paid to agencies, referral bonuses)
- Sources for recruitment (consultancies, referrals, campus hires, advertising)
- Termination within 3 months and reasons for it

Collect as many details as possible on recruitment.

Stage 2: Look for Opportunities

If you pay more to consultancies, check if those positions can be filled through employee referrals. Check whether you have a clear process on recruitment (effective interview techniques, effective screening techniques, and the skills to identify the sustainability of employees).

Stage 3: Implement and Evaluate

Once you find the areas of improvement, please implement them. Rather than saving costs for the company directly, HR can save a lot by designing clear HR policies and procedures.

Do you have a policy on leave encashment for employees? Any limit on that? How about reimbursements and expense claim policies? Are they cost-effective now? Please understand your HR department and functions completely and the costs associated with them. Sometimes, more than cost-saving, HR can play a vital role in improving quality and efficiency.

Good luck with your project.

Nicely posted by Nathrao...

Yes, automation directly reduces the cost of the HR department. Consider the following areas where more people are typically required to work in HR:

1. Hiring
2. Employee Database Management
3. Attendance & Leave Management
4. Payroll & Statutory

Today, there are many tools available in various sizes and costs. Choose the right product for your needs and see results within 3 to 6 months. For more information, please click here: https://tinyurl.com/ycdkgojv

Regards,

After proper data collection and analysis, you may consider the following areas:

1. Recruitment cost
2. Training and development cost
3. Wages and salary implications of manpower reduction
4. Administrative cost reduction or controls
5. Please send more details about your functions to generate additional ideas.

Understanding Costs Beyond Money

Let's understand that costs can occur in more than just the form of money or expenditure. Time spent on activities that could be done in a shorter time is a cost. The opportunity missed is a cost. The dissatisfaction caused in an employee is also a cost in a way.

Recruitment Costs

Let's take a simple function - recruitment. Big firms could be spending anywhere between thousands to lakhs in paying consultants. However, a lot of hot resumes can be received from the organization's own careers section. But that's rather an underrated part of the website.

The cost of recruitment can also be significantly decreased by using less expensive ways of employee engagement and satisfaction. Every new recruit brings with it the cost of onboarding, the cost of time just to learn the system and processes, and much more.

This is just a perspective, which, when explored deeply, can help in significant cost savings.

For effective cost-saving tips, check out this video: https://www.youtube.com/watch?v=xA7y...&t=17s

As well as this article on how to save on HR expenses by up to 90%: https://optimum-direct.com/blogs/201...expenses-by-90

Cost saving is not a variable of a department, e.g., HR, Finance, Production, but it is the role you have to play for cost saving in your domain. The cost saving for the HR department may not be as tangible as in the case of the production department. However, every activity of your department, be it recruitment, performance evaluation, or employee development, can result in significant cost savings, albeit intangible. The cost savings due to improvements in productivity are a result of the efforts made by the HR department.

Thoughts on Cost-Cutting in Organizations

I have gone through the various comments recorded by our professional colleagues. They are discussing various ideas for cost-cutting, and I understand the significance of most of the ideas and respect the views expressed therein. However, I have different thoughts.

1) Cost-cutting per se is not possible for organizations where expenditure is at a bare minimum level, and they spend money for legal compliance.

2) The skill lies in achieving better quality at a minimum cost, whether it is recruitment cost or training and development cost.

3) Automation is good but involves a lot of initial investment, and an organization that is seeking cost-cutting measures may not be open to the idea of further investment.

4) It is always observed that whenever a company introduces VRS or similar measures, the organization loses skilled or experienced workforce.

5) Therefore, we must apply professional maturity and discuss with superiors about the pros and cons of such decisions.

6) If the organization wants to proceed with cost-cutting, then we need to make decisions applying professional maturity in consultation with the director so that they are also aware that cost-cutting may result in a loss of quality.

7) I strongly feel that thoughts of cost-cutting have arisen because superiors might have noticed wasteful expenditures in certain areas, and it would be beneficial to identify those wasteful expenditures and address them. HR can facilitate that.

Thanks & Regards