Ineffective HR processes may drive up your costs of doing business unintentionally. Some of these costs are difficult to see initially, but they can quickly become serious problems as you strive to run an efficient, profitable business. Here is a closer look at some of the ways your ineffective HR practices could be hurting your bottom line.
If your employees are not productive, then you are offering fewer products and services to your customers. This adds up to less money for your business. But how does HR play a role?
HR practices that show employees their value tend to boost morale and productivity. Conversely, poor HR practices result in unmotivated employees who are not passionate about their work. Unmotivated employees become unproductive as they fail to perform their job responsibilities, and your entire company suffers.
If HR is not meeting the needs of your employees, your team members will look for a new employer who has practices in place that make them feel valued. This hurts your business because high employee turnover becomes expensive when you look at the costs of:
In addition, high turnover makes it nearly impossible to attract or keep skilled talent. When you have top-notch talent, you should take every precaution to keep that talent, and that starts with having effective HR.
Employees need to know they can count on you to provide the right benefits and handle those benefits well. Employees expect a good plan with reasonable deductibles and copays, and competitive vacation packages. They also appreciate creative benefits that address work/life balance and make their lives easier.
One cost of bad HR is the risk that comes from poorly trained employees who do not go through a thorough onboarding process, including company safety protocols. When your employees are not trained in the safety measures critical to your business, their safety--or the safety of your company--is at risk. Effective HR ensures all new hires know what they are supposed to be doing, and how to do it safely.
The risk doesn't stop with the physical safety of the employees. In many industries, security is another important measure, and poorly trained employees put your company's security at risk. One breach, even unintentional, could destroy your company. In this case, the cost of ineffective HR is simply too high.
If your company ever faces an audit or lawsuit, you could end up with serious fines if your documentation is not up to par. Proper documentation is the only way to prove that you did not violate civil rights or labor laws in hiring, promoting, or firing your employees. A quality HR team is central to ensuring the paperwork to prove compliance is in place. You must comply with current hiring regulations, and you must have proof that you are.
Poor documentation can cost you in other ways. If you find critical documents are missing or have been lost, you will have to redo them. Time is money, and the more time you spend searching for or redoing documents, the less time you can spend on more productive or income-generating areas of your business.
The cost of inefficiency is why an experienced HR team is a critical part of your company's operations. Working with a PEO can help your HR department be more productive, saving you money and improving the productivity of your business as a whole.