HUMAN RESOURCES SECTOR
There exist various ways of investment into human resources.
Businesses can invest in general human capital, which is an investment into specific or general training that enables acquisition of general knowledge usable in various companies.
This results in higher future expected return of investment.
Budgeting involves the systematic collection of information and data so that the finances needed to support an organization's objectives can be projected.
Most organizations have some sort of process for developing a budget.
Prior to the budgeting process, an organization should have completed some kind of strategic planning to identify annual goals and objectives.
That will allow departments to concentrate their allotted budgets in supporting those objectives.
Two common budgeting methods are:
Incremental budgeting - using the current budget, a new budget is developed by making adjustments upwards or downwards to each item based upon expectations.
Zero-based budgeting - every item included in the budget must be justified before being included; therefore, the process begins with a clean slate.
Budgeting requires the collection of many forms of data.
From a human resource perspective, the data needed to create a new budget include the following:
Number of employees projected for next year.
Benefits cost increases or projections.
Salary cost increases or projections.
Projected turnover rate.
Actual costs incurred in the current year.
New benefits/programs planned.
Other changes in policy, business strategy, law or regulation that may impact costs.
HR may not always be able to directly contribute to the bottom line, but there are a number of impactful ways that it can help drive revenue.
Here is a list of 14 things your HR department can do to drive revenue at your organization.
Win over talent from your competitors.
Win over the best talent with better compensation, benefits, opportunities, and a more attractive workplace.
Retain your top producers.
Figure out what will make top performers stay and create a strategy to keep them at your organization.
Pay for performance.
Create an incentive program directly tied to profitability.
Whether that's a bonus program or profit-sharing program, it should produce performance gains.
Be choosy with your benefits offerings.
Select benefits that matter most to your top talent.
You may administer 20 different benefits when just 5 are used and valued.
Incorporate drivers of revenue into performance management.
Understand the drivers of revenue in your organization and make sure those are measured in the performance evaluation process.
Conduct a training needs assessment to prioritize and identify critical training needs across the organization.
Use high quality training methods that lead to behavior change.
Link wellness to health insurance usage; training to performance improvement; engagement to profitability gains.
Showing ROI helps build a business case for HR and reinforces its value.
Improve medical and leave management
Administering employee leave more efficiently and choosing an effective Managed Care Organization (MCO) are ways that you can help employees get back to work in less time and reduce the drain of medical leave and workers compensation costs.
Measure what matters.
Measure HR cost factors (i.e. compensation cost, benefits cost) and revenue per employee.
Know what your top HR costs are and how those compare to other organizations.
Implement time-saving systems.
Digitize HR data and record retention.
Make it easy for employees and managers to access and use the information you collect so that they can focus on producing results.
Identify obstacles to revenue generation.
Lead performance improvement efforts, suggestion and feedback programs, and other means to help identify opportunities to increase revenue.
Plan your workforce.
Understand your organization's areas of growth and ensure that you are stacking those areas with top talent.
Workplace planning prioritizes hiring needs.
Reduce legal fees.
By choosing inexpensive legal resources and assistance, obtaining legal knowledge, and keeping your organization compliant, you can significantly reduce legal fees.
Save on staffing.
Hiring is arguably one of your most expensive HR areas.
Reduce your cost per hire by taking advantage of staffing service discounts and using creative, inexpensive sourcing methods.
HR departments that drive revenue and results in their organizations take advantage of opportunities to save their organizations money wherever possible, identify opportunities to build up their top revenue producers, and simply manage HR smarter and more efficiently.
Tasks that necessitate Funding:
The time and personnel needed for these tasks will be related to the number of employees and your business plan.
But no matter what, they will all need funding- regardless of your business size, each HR task requires ability and time.
As a small business owner, you cannot afford to spend your own valuable time on administrative tasks and should outsource as many as possible to a payroll service or software support.
With growth, the business can pay to move to an HRIS or HRM service.
Compassionate tasks are essential for a healthy culture and risk management, but they can also be time-consuming affairs for an owner to undertake.
The sooner you assemble an all-star HR team even if they’re part-time or part-software the better your business will be.