Numbers don’t lie.
You’ve got to sit up and notice when stats show organizations losing 20 to 30% of their revenue each year, just because of inefficiency. It’s especially true in HR. Looking at losses incurred in recruitment, hiring, candidate interviews, skill training, and typical reduced productivity from new hires, it costs:
- $3500 to replace a single worker who gets paid $8 per hour
- 30 to 50% of the annual wages to replace an entry level employee
- 150% of the same for a mid-level employee
- An unbelievable 400% for a high-level employee
Inefficiency in HR may be ignored in a lot of places, but that doesn’t mean this is a light matter. Companies are bleeding money and good resources, and it’s time you took an honest look at the bad effects of inefficiency in HR processes.
1. A Decline in Employee Engagement and Productivity
When the HR department is inefficient, a drop in productivity is the first bullet that pierces the company’s armor.
Employee engagement is key to maintaining a workforce that is driven, motivated, and interested in giving their best for the organization. Without effective skill training and sub-par efforts to maintain employee morale, engagement takes a dive.
And when that happens, you are stuck with a bloated, inefficient workforce that keeps bleeding you with regular salaries but isn’t really invested in the success of the organization.
2. A Growing List of Unhappy Customers and Employees
The moment feedback and reviews went online, it changed the way businesses operated. In today’s world of anonymous, unbiased, and highly publicized reviews, you simply can’t afford to have dissatisfied customers on your hands.
Not only customers, but also employees will go online to voice their frustrations with their employer. A recent study said that 69% of job seekers would not take a job with a company that had a bad reputation–even if they were unemployed.
But that’s exactly what you’ll face when your inefficient HR team leaves a number of complaints open and unsolved. If in-house HR isn’t up to the task, you have a serious problem.
Losing customers and employees due to unresolved issues and inefficient practices make HR looking bad as it works towards equipping company goals.
3. More Mismatched Hires
Unengaged and unhappy HR executives will communicate lackadaisically with candidates, and may not concern themselves with being thorough about employee requirement matches. The result? You end up having to do some unnecessary internal shifts, or hiring afresh from outside the office.
On an average, that’s a total cost of 70 to 200% of the salary to replace top talent.
4. Issues With Non-Compliance
HR is responsible for making sure a company’s workforce is compliant with established labor and employment regulations. So what happens when inefficiencies creep into compliance processes? A legal and reputational nightmare.
An HR department that drops the ball on crucial policies like equal employment opportunity laws, leave benefits, and department-specific regulations could have a devastating effect on the entire organization. It can affect finances directly, cause expensive litigation issues, or indirectly affect finances by damaging the company’s reputation.
5. Employee Turnover Becoming A Massive, Leaky Hole
Turnover is a fact of life, but when employees are lining up at the door to find new opportunities, you’ve got a big problem on your hands.
Employee turnover is affected by many factors, such as poor employee engagement, bad onboarding, low-quality management, and unfulfilled training. Consider the exit interview–it is designed to find out why an employee left, such as workplace attitudes and overall morale. When these are carried out by an underperforming HR department, trends that are causing turnover may be swept under the rug.
The result: that gaping hole through which your organization keeps losing valuable workers.
What’s the Solution?
Inefficient HR processes are a dangerous threat from right within an organization. You may think that better checklists and more compliance are the best way to handle this, but these solutions are hard to enforce and implement.
It’s impossible to manage every last HR task personally, and that’s why you need a solution to fix your HR process before it’s too late, and you’ve lost employee confidence. Trust numbers, and make the required changes within HR before things get too bad to fix!
The secret to bringing back efficiency isn’t with more spreadsheets, checklists, and email. A better solution is to take a cue from how business units handle their process inefficiencies is business process management.