How HR Saves Companies Money

Small business owners have a lot to manage, including employees, clients, and budgets. With all the priorities to juggle, they will often try to find places to trim the fat with both time and money. However, wise managers know not to save a penny or hour here only to lose a dollar or week down the line. And perhaps counterintuitively, HR departments save businesses money.

So, how is it possible that paying for an extra employee, department, or fractional HR service can save you money in the long run? Well, there are several ways, but they primarily break down into four categories: employee retention, legal compliance, Higher productivity, and avoiding lawsuits.

Employee Retention

It’s common knowledge that retaining an employee is often more cost-effective than replacing them, even if it means paying more. While this may seem counterintuitive, it takes only a moment to understand why.

Recruiting and training take time! So does the cost of not having someone available in the interim. Newer employees are also more likely to make errors, which may cost you money or, worse, customers.

So, how do you retain good employees? One way is to keep your employees happy.

While flashy companies like Google often press for their extravagant workspaces, a good company culture can be simpler than that. IT all starts with providing clear expectations, recognizing benchmarks, and putting structure in place to help employees improve and grow.

HR saves companies money by helping you create policies involving handbooks, onboarding, and more that improve your employee retention.

Higher Productivity

Closely related to employee retention is productivity. Happier employees do better work. Again, culture plays a role here. Setting clear expectations is key.

Another way that HR helps save companies money with higher employee productivity is by giving them a place to express concerns that may feel safer than going to a manager.

HR departments help smooth over conflicts and improve employee relations so they feel better and work harder.

Avoiding Lawsuits

Finally, the third employee-related way that HR saves companies money is by preventing lawsuits. When you can resolve conflicts early, they’re less likely to escalate.

That doesn’t just help you keep employees and (get them to work harder and happier); it also makes them less likely to sue you for an unfair situation or a hostile work environment.

This is the most extreme version of a situation, but even if you don’t think it’s likely to happen at your business, it’s better to be proactive.

Legal Compliance

At Ollie and Associates, one of the services we offer most frequently is handbook creation and review. A well-thought-out and properly written handbook is the key to a solid foundation for your employees’ work experience. And while handbooks aren’t explicitly required in every state, including Virginia, where we’re based, some type of documentation is necessary nearly everywhere.

We will go over your handbook and onboarding procedure to ensure you’re compliant with all federal, state, and local laws, potentially saving you thousands of dollars in fees and preventing interruptions to your business.

HR Saves Companies Money In Ways Large and Small

While the areas we included in today’s blog are some of the significant ways that HR saves companies money, there are a thousand other things that we may notice as we begin our relationship. And the best part is, with fractional HR departments, or HR consulting, you only get what you need. You don’t need to create an entire HR division for your company to experience the benefits of an HR expert.

Lastly, HR is just the beginning! We have decades of experience in supply chain, efficiency, and business, so we’ll be happy to create the custom package that will work best for your company!