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HR Budgets Under Pressure

 
6
Feb

HR Budgets Under Pressure

Sadly, the HR function in any business is still traditionally seen as an overhead cost for the business.

And unfortunately for HR professionals, when the economy has been difficult and companies still look to ‘tighten belts’, ‘batten down the hatches’, or one of the other metaphors used to avoid mentioning ‘cost cutting’, the HR budget may come under the spotlight. In the current climate there will be many businesses and HR departments out looking at how they can do more (or at the very least the same) but with less.

Yet, cutting HR costs can be a false economy if that means cutting corners. It could expose the company and/or the Directors to prosecution if, for example, right-to-work checks are not done and recorded, or required Health & Safety training is not kept up-to-date.

When under pressure to cut costs, companies can also risk ending up at a tribunal, if in their haste to get someone out of the door they have not followed correct process. As all HR professionals know, if you haven’t followed the correct procedure then you’re probably doomed at a tribunal, whatever the merits of the underlying case.

However, cutting HR costs often also means cutting back on programmes which can contribute considerable long-term value to an organisation, whether that’s implementing a performance management system, investing in employee development or developing a talent management process. Failures to invest in these areas can lead to employee de-motivation, lower productivity and unwanted staff turnover. The costs of losing good people (both in terms of lost output and recruitment costs to replace) can dwarf the initial cost savings achieved.

So how do we keep costs under control without compromising on good HR practices? The answer is to find ways to work smarter and an area that is ripe for smarter working is the working relationship between HR and line management.

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