Human Resources strategies examines cost-savings approaches in the areas of HR Policies, Benefits, Compensation, Personnel Insurances, and Training.
HR Policies – Building Trust and Partnership
* The first priority to reduce costs, though it is counter-intuitive for many managers, particularly if they have been considering layoffs, is reducing turnover. Turnover is very expensive, and if management does not understand the actual costs of turnover, the organization may not do everything possible to reduce it.
ReadySetGO Performance estimates the cost of replacing a good employee making $45,000 per year at $82,000. This figure might be somewhat lower for a nonprofit. Still, the cost of terminations and hiring in nonprofits is considerable, and there is often little awareness of the true cost.
If the organization is losing $80,000 every time a valued employee leaves, isn't it clear that reducing turnover can help prevent financial crises and a need for layoffs?
* Improvements in hiring practices are one of the most cost effective techniques to reduce hiring errors and thus reduce voluntary and involuntary turnovers. Even if making good hires means spending more money, the process is still a good investment that will save money in the long run (and sometimes even in the short run). Strategies to improve hiring include:
• Create comprehensive job descriptions
• Use interview teams of at least two people
• Write out the interview questions based on the job description and scenarios based on real challenges faced by the person in this position
• Train all interviewers in what can and cannot be discussed in a hiring interview.
• Develop orientation plans for new hires to train them on every task required by the job description
• Build a supervisor training component into your Human Resources programs to improve employee performance, reduce turnover, prevent liability, and reduce costs.
Ensuring Your People's Insurance
* Health, dental and vision insurance are like other commodities in that it pays to shop around. Switching plans may generate substantial savings. However, be sure that staff support the switch, or the distress over potentially having to change doctors may undermine any benefit from the savings. One way to get staff buy-in is to assign the project of researching various health insurance options within a specified range to a representative staff group. They will be more able to persuade other staff to go along with the new plan than management.
* Self insurance can both lower costs and improve the quality of services taff receive, which helps to reduce turnover. The easiest and safest self-insurance programs to implement are dental and vision coverage. Many employees never use dental or vision services, but if you provide this coverage, you are paying for it whether they use it or not.
Improving Benefits while Improving the Bottom Line
* One element of retention-improvement programs is letting employees tell you what they want by setting up a cafeteria plan in which staff can choose a custom-tailored benefits package. Most nonprofits are too small to provide an array of health plans and insurances, but, by joining with a larger group, a greater range of plans is possible.
* Cafeteria plans and employee choice do not mean spending more for benefits. Costs can be controlled by setting up a “benefits bank”, a set amount for benefits provided for employees which they can ‘spend' on whatever array of benefits meets their needs.
A Just Due – Compensation
* A written compensation system is a great help in creating a sense of fairness among staff and a rationale for salaries that funders and donors will accept. Such systems also provide a means of tracking organizational performance against the job market, and a way of controlling salaries so that negotiations do not lead to poorly-thought-through actions during hiring.
* One of the fastest ways to bleed money is to have employees work overtime. Workloads must be objectively analyzed to evaluate how much time is required for tasks, identify streamlining opportunities, and improve proficiency. Supervisors must be aware of employee activities and able to enforce rules and discipline. No non-exempt employee should think that it is okay to work OT and get approval later.
Training – Continuous Improvement for Pennies
* Orientation that is custom-tailored for each position is the most effective way to provide a thorough introduction to the job and agency. This may sound challenging and expensive, but such customized plans are easily created using the job description as a template for a checklist identifying the tasks for which training is needed.
* Training staff on the computer programs they use aids effectiveness and productivity. Just make sure that the type of training is suited to the person taking it and that s/he will use the knowledge. People have different learning styles, and a training format that works for one type of learner may be wasted on someone with different learning needs.
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