How does HR contribute to employment profitability? HR covers a lot of territory, much of it cluttered with paperwork, but it really does have a precise business purpose. The point of HR is to make employment more profitable. HR does this in three fundamental ways. First, HR protects the organization against employment-related lawsuits and fines. Second, it reduces the costs of employment. And third, it maximizes employee productivity. In short, HR helps the employer save money and make money in all things related to employment.
Protection from Lawsuits and Fines
Nothing can prevent an employer from being sued, but good HR can substantially reduce the risk of lawsuits and other costly consequences of non-compliance by ensuring that the organization follows federal, state, and municipal legal requirements.
The government has multiple agencies tasked with investigating violations and administering fines. The Equal Employment Opportunity Commission investigates discrimination claims. The Occupational Safety and Health Administration looks into workplace hazards and safety violations. The IRS and Department of Labor may ask to see your books. And the U.S. Citizenship and Immigration Services might audit your I-9s.
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
Competitive wages and benefits, office perks, and first-rate technology can help you find and keep great workers, and they can help you improve your products, boost your sales, and grow the business. But 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. And 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.
Increased Employee Productivity
In addition to preventing and reducing costs related to employment, 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.
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. Employers bring in more revenue, employees develop professionally, and customers get better service. Everybody’s happy.
Good for Business
The business case is the case for HR. Ignoring HR or neglecting its responsibilities puts the organization at greater risk, wastes money on subpar and inefficient operations, and hinders employers and employees from reaching their full potential. Investing in HR reduces risk, eliminates inefficiencies, and improves productivity. Whether you’re a business owner, office manager, HR department of one, or on a team of HR practitioners, spending time on HR bolsters everyone’s success.
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