In Washington, as debate continues over how to resolve the country’s debt crisis, age-old philosophical differences divide parties and politicians – is it better to cut spending or generate more revenue by raising taxes? American business owners face similar fiscal issues everyday. Unfortunately for them, generating new streams of revenue isn’t always as simple as raising prices. (To do so might provoke a revolt and risk the loss of their most loyal clientele.) Instead, business owners have to get creative. They have to continuously look for clever ways to earn more and spend less. Smart, cost-efficient human resource practices can help companies do both.
Your employees, good or bad, can make or break your business. Smart, hard-working employees will contribute to your company’s productivity and profitability, so selecting quality job candidates is critical. Proactive recruiting can bring qualified job candidates to your door, but a disciplined hiring process will ensure you identify the best candidate. Begin by thoroughly defining the open position. A comprehensive job description should include responsibilities of the position, as well as the qualifications and qualities you seek in an applicant. When it comes time to decide which candidate fits your company and the position best, refer to the job description and evaluate candidates according to how they measure up.
Experts estimate that turnover costs companies anywhere from one half to five times an employee’s annual wages depending on his position within the company. There are also costs associated with lost productivity, knowledge and relationships, and of course, payroll taxes. Because unemployment taxes are pay-as-you-earn, Texas employers pay state unemployment, or SUTA, taxes on the first $9,000 a worker is paid during a calendar year. If one person holds a position for the entire year, the employer only pays taxes on the first $9,000 that individual earned. However, if three different people rotate through the same position over the course of a year, the employer will have to pay SUTA taxes on the first $9,000 each of the three workers earns. That is a significant expense that can be avoided when workers stay in their jobs. Hiring smart from the outset and keeping employees happy and engaged can help.
When employers aren’t careful, turnover can lead to other expenses too. Companies can mistakenly continue to pay costly health insurance premiums months after employees have been terminated. Paying unnecessary premiums is like spilling cash. (And like any spill, once the money is dispersed it can rarely be recouped.) Sadly though, it is relatively common for companies whose HR processes aren’t buttoned up.
Adopt Paperless Processes
More and more companies are adopting paperless HR processes, such as electronic employment forms, direct deposit payroll, and online benefits enrollment. Not only are paperless processes more environmentally-friendly, but they can reduce operating costs and streamline time and resource-intensive processes for greater efficiency.
Instead of taking on the added overhead of another HR professional, some cost-conscious companies are outsourcing all or part of their HR to Professional Employer Organizations (PEO). Outsourcing can provide business owners a turnkey human resource solution, with qualified experts, proven processes and advanced technology, so companies have at their disposal all the HR experience and hands-on support they need. What’s more, outsourced HR professionals can handle many of the complex HR matters that often confound business owners, things like workers compensation claims administration, payroll tax compliance, and unemployment insurance claims. What’s it cost? A PEO offers the depth and dependability of an entire in-house HR team for less than the cost of one full-time employee.
To be successful, business owners can’t waist time debating how to generate revenue, cut spending, or reduce their debt. They have to take action to make it happen. Careful hiring practices, buttoned-up HR procedures, and efficient employee processes can help companies achieve their goals and balance their budgets.