Decoding three lethal mistakes that can eat up a major chunk of an HR budget

HR is a people function. However, changing business needs have redefined the role it needs to play in organisational development. With companies switching to cost rationalisation mode , the HR department is facing increased pressure to manage costs and extract maximum value from investments.
A 2012 Hay Group report titled ‘Next Generation HR’ underlines this fact by saying that HR leaders would be expected to ensure ‘greater return on investments through people’ in the future. The fact is that the cost metrics combined with effectiveness and quality will be the barometer to measure their efficiency. In such a scenario, making mistakes that increase costs and turning HR into an investment center is something that the industry has no scope for. Here are three mistakes that managers commit:
1. Not leveraging technology:

From apps that make hiring decisions easy to systems and softwares that automate back-office works, employee transactions etc, technology today offers a solution to almost every process that HR managers used to do manually. Technology helps save cost in two ways: One, by enabling interactions without physical movements and two automation helps reduce manual work thus gives the HR manager more time to concentrate on the company’s business strategies. Scheduling and approvals take up a lot of the time of an HR professional. Moreover, dealing with people will not be the same. With advent of workforce that prefers to work from different locations and at flexible hours, the rules of games will change fast. Sticking to age old processes will do no good.

2. Making the wrong hiring decision:

An article from the website ceoonline.com quotes statistics from a study by Corporate Leadership Council to show that hiring the wrong person can cost a company almost three times his annual salary. The factors that lead to this cost are: Wasted salary, wasted benefits, severance pay, recruitment fees, training costs and hiring time. A wrong hire eats up a company’s profit in more than one way. Besides the direct effect on cost, a wrong hire affects productivity and company culture negatively, thus increasing indirect expense. This is where the need to have a well designed, up-to-date and structured recruitment process arises. It is essential that a candidate be hired after analysing him against skills critical to the profile in question. Random hiring decisions cost more than what meets the eye.

3. Making the wrong training decision:

Training is an essential part of employee development and engagement exercise. Undoubtedly, it is a costly yet necessary investment. They will not deliver results unless they are utilised properly. Sometimes HR pick up the wrong training sessions or organising ones that may lose value in the longer run. The suitability of training programmes, employees who need that training, cost of training instructors etc are factors that should be considered. Internal trainers are also one option that could be explored because junior and newer employees can learn a lot from the experienced workforce. It is up to the HR to analyse all dimensions and plan it in order to drive maximum engagement and reduce wastage of money, which in fact comes back to bite it.