HR is a broad category. It brings to mind employee benefits, the oversight of the employee lifecycle, and lots of paperwork, but it does have a precise business purpose. The real intention for HR is to make employment more profitable. It does this by helping the employer save money and make money in all aspects related to employment.
HR does this in three essential ways:
- Provides Protection: It protects the organization against employment-related fines and lawsuits.
- Reduces Costs: It reduces the costs related to employment.
- Productivity: It maximizes employee productivity.
While there is nothing that can prevent an employer from being sued, strong HR can substantially reduce the risks of lawsuits or other costly compliance-related consequences. HR does this by ensuring the organization is following federal, state and municipal legal requirements.
The government has in place many agencies that are tasked with investigating violations and administering fines. Here are a few:
- The Occupational Safety and Health Administration looks into workplace safety violations.
- The Equal Employment Opportunity Commission investigates discrimination claims.
- The U.S. Citizenship and Immigration Services might audit your I-9’s.
The penalties for violations can vary widely, from inconvenient to devastating. According to a study published by Hiscox, the average cost for an employee lawsuit that results in a defense or settlement payment is $160,000. Employing people comes with risk, and it is HR’s responsibility to manage and reduce the risk for the company.
The penalties for violations can range from amounts that are mildly inconvenient to those that are financially devastating, so you don’t want to leave these areas to chance or hope you stay under the radar. Employing people comes with risk, and it’s an HR job to manage and reduce that risk.
Reduction of Employment Costs
Compensation is a critical part of any workplace strategy. Balancing the need to compensate high achieving employees and to reach business profitability objectives is essential. HR guides a business owner by determining how to compensate the workforce at a rate that is equal to their value to the business.
There are also employment costs HR can help cut:
- Hiring and recruitment processes can be streamlined and assessed for inefficiencies.
- Turnover costs can be reduced by improving your onboarding process, communications, and engagement efforts.
- Inefficiencies can be resolved through performance management and discipline.
- Offering some form of Paid Time Off can enable sick employees to stay home and rest so they don’t come to work sick, spread their germs, and reduce the productivity of the office even more than if they’d stayed home.
HR helps with recruitment practices by putting processes in place to hire the right people, and guide them through the hiring process . According to recent study by careerbuilder.com, three out of four companies have made a bad hire, and the average cost of hiring the wrong person for the job is $14,900.
Increased Employee Productivity
HR can also help the organization increase its revenue by encouraging and helping employees to be more collaborative, innovative, creative, knowledgeable, skilled, and just plain better at their jobs. Coaching, training, skill development, career advancement, outside education, and culture advancements are tried-and-true productivity-building methods. They also have the added perk of directly benefiting your employees.
HR provides employees with clear, concise, and transparent guidelines for their position resulting in focus and increased productivity. When HR works on maximizing productivity, it’s able to serve the interests of both the employer and employees in ways that are visible and appreciated by all parties.
HR is Good for Business
Undervaluing or neglecting HR and its responsibilities puts an organization a greater risk, wastes money on subpar operations, and hinders employers and employees in reaching their full potential. Whether you are a business owner, office manager, an HR department of one, or a team of HR professionals, spending time on HR supports everyone’s success.