Employees are the principal foundation of all companies. It is important to realize that there are many different types of employees and the ones you choose to hire will significantly impact how well your business is run. In other words, hiring motivated and well-rounded individuals will reduce expenses, and hiring incompetent ones will cost your company numerous losses. At Metropolitan risk, we never stop thinking about your issues and looking for ways to improve your bottom line. In our research we have found that effectively managing your HR practices can successfully achieve this. Yes, quantifying the mechanics of HR practices can seem vague at times, which is part of the reason many executives do not have a full understanding of the actual costs. However, to help clarify this situation, we have provided a basic quantitative guide that will make you more aware of your HR expenditures, and save you both time and capital.
Although employees should always be treated with respect, as an executive it is also important to view them in terms of their productivity. There is no denying that there are disparities in proportional productivity and salary for various employees. For example, an employee getting paid $60,000 and generating $100,000 per year for a company is much more valuable than an employee guaranteed $50,000 who is fired after one month on the job. If you ignore losses that result from HR practices, such as the $50,000 loss in the latter example, they can accumulate and put your business at risk. Contrarily, if you recognize the costs of your HR practices and identify where there is room for improvement, your business will experience multiple financial growth opportunities.
Along with creating a great workplace environment, in order to ensure a high number of motivated and productive workers, you must also invest additional funds in to lowering the costs of your HR practices. Good employees want to work for companies that hire capable coworkers and that are proactive in taking advantage of opportunities to make profits. Here are some questions you might want to consider when thinking of the best ways to invest in lowering your HR costs:
- How much are you willing to invest to keep good employees working for your company (incentives, promotions etc.)?
- How much cost are you willing to incur to keep poor employees?
- How much are you willing to spend to maintain an HR management system to track performance improvement for employees?
- How much are you willing to invest to drive down employee claims?
- How much are you willing to invest to drive down your workers’ comp experience mod?
Although at first, it might not seem enticing to spend additional funds, in the long run, your business will experience significant gains due to an overall improvement in the management of your finances. Think of it as investing in long-term security with a permanently positive ROI.
Employee payroll is the third highest expense for companies in the United States(the first for small businesses). You want to make sure that you are making effective use of this cost and not wasting money on unproductive resources. If you feel that your company can use help in this financial area, please click here to get your free HR Expenditure Guide and get in touch with a Risk Advisor.
