Why HR Matters To Your Bottom Line

Is an HR function really necessary for small and midsized companies? Certainly, the typical general manager or owner will say, we need somebody to handle transactional processes like processing hiring paperwork, background checking and payroll and organize the company party. In smaller companies the office manager or accounting manager might end up with the job with little or no training and limited professional interest in the practice of human resources; which perpetuate the belief that HR is just a cost center handling administrative functions.

More and more research is surfacing to help dismiss the notion that HR doesn’t contribute to the strategic direction of a company. Results from the Chartered Institute of Personnel and Development’s recent three-year study suggest that human resources practices have a positive effect on organizational success, particularly when it comes to influencing employee commitment and performance. Engaged employees are productive employees, productive employees increase sales and revenue. Beyond employee engagement consider the fact that on average 35% of operating expense is attributed to employee compensation and benefits. With healthcare reform benefit programs will need significant revamping and as the economy improves compensation programs will need adjustment. Compensation and benefit analysis to ensure that the best programs at the best price is a key area for HR to provide value.

What else can HR do to improve overall performance of the company beyond “pushing paper”?

1. Make sure that managers hire well. The cost of a bad hire results in poor morale, harassment and conflict issues, questionable worker’s compensation claims, excessive use of sick time, unnecessary costs to health insurance plans and low productivity. Never mind the time and attention management wastes on dealing with a bad hire. It’s estimated that the actual cost of a bad hire is 1.5-3 x the annual salary. Find and deploy the right tools, software and programs to stop bad hires.
2. Really understand employment laws and recent legislation and court rulings and appropriately implement policies and procedures that comply with those laws. Ignorance is not an accepted defense in a court of law. The cost of non compliance can literally be in the millions in litigation, settlement and fines. There are countless HR software and content vendors, internet resources (http://www.dol.gov/ is a great place to start) and free or paid webinars available to keep the person responsible for HR updated. KPA offers weekly webinars on EHS and HR compliance topics, presented by leading experts, at no charge. Register of upcoming webinars or downloaded recorded versions at www.kpaonline.com/webinars
3. HR can be a key resource in monitoring employee satisfaction. Poor morale results in poor productivity and high turnover. These two factors directly increase tangible and intangible costs. Poor employee morale is a consequence of poor and/or unfair management practices. Use performance appraisals, pay plans and job descriptions to clearly communicate and measure performance expectations. Make sure all your managers have training on how to manage for optimal results; good management is a skill that can be taught.

Convinced that HR can be a value center not a cost center but need help getting started implementing best practices? HotlinkHR™ provides the software, tools and expert advice you need to automate all essential HR processes, be confident and knowledgeable when handling employee issues and ensure compliance with state and federal regulations. Click here to request a demo.