HR – an investment, not a cost

Tommy Smyth explains why the value of good HR practices can be underestimated.

Many business owners and senior managers think that HR is nothing more than a bureaucratic paper trail. It is nice to give employees a few financial rewards or fluffy training courses but when it comes to it, HR is a cost to the business in terms of time and money.

On the face of it, in pure black and white terms, it can be difficult for good HR practice to directly show a positive impact on the bottom line. But, if you bear with us through this article, we will highlight a few points we were taught at ‘HR school’ which will hopefully provide food for thought to all you non-believers!

In a similar way to health and safety, if HR is being effective, it should look as though it’s not needed. If you have few industrial relations and employment law problems, this could be as a result of following good HR practice in your business. You never see the financial benefits of not having an unfair dismissals case brought against you, the fees not spent on solicitors, or the costs not incurred by having to repeatedly recruit for the same position. Good HR and industrial relations does affect the bottom line by avoiding unnecessary time lost and money spent managing through costly industrial relations and employment law issues.

Value of employee training

Employee training is usually a core part of the HR system. On the face of it, training takes up the employer’s time, effort and money. The cost of training can be easily calculated. The benefits, however, may be harder to quantify, but should include:

• increased work performance and increased sales/value;
• ability to manage non-performers for failing to follow training;
• greater morale amongst employees who value the learning experience and commit to their employer; and,
• robust HR policies can lead to reduced absenteeism. By carrying out a concise ‘return to work’ interview with an employee each time he/she is absent from work, you can often protect an employee from catching the dreaded ‘Mondaymorningitis’. If an employee has not been genuinely ill, they will not want to sit down with their manager to discuss their absence so it may encourage them to report for work on a more regular basis.

Over the past two years, we have worked with numerous employers to put in place incentive schemes for colleagues or teams of colleagues such as store or department. This can be a bonus based on key performance indicators or commission on sales. The team incentive has proved very popular. You are incentivising the team to self-motivate themselves and each other to deliver results which are of benefit to them all. As an employer, you want employees to get paid more, because once your scheme is correctly calibrated, the more the employees get, the more you get.

Attracting and retaining employees

In 2017, we have seen the labour market heat up and many clients have anecdotally informed us of the difficulty they are having attracting and retaining colleagues. From the research we have undertaken for clients, for a large cohort of the population it is not just money they value in their employer. Critical factors also desired by prospective employers include:

training – how will working with an employer increase their overall skills;

culture – what does the employer value, what is their social conscience;

career path – what opportunities exist for the employee to progress internally;

trust – will the employee be trusted to take on tasks and projects and express themselves through these; and,

what other benefits does the employer offer – employee assistance programme, bonus, discounts, health insurance.

Better, happier employees work harder for their employer. Better trained employees sell more for their employer. Employees who feel respected, respect their employer more. Better organised training and HR files make is easier to identify and quicker/cheaper to remove under-performing employees.

Although at times the work can seem tedious, we encourage the implementation of detailed internal policies and procedures. Putting these in place can help avoid potential employee issues and reduces the possibility of an employee creating a successful case against you. Remember, the more HR procedures and records you can produce in times of query or dispute, the better placed you are to defend yourself. There may only ever be a dispute with 1% of your workforce, but we will always argue it’s worth ensuring 100% compliance to avoid the 1% costing you a lot of money and time.

Disagree with us? Let us know. We welcome your feedback at 021 4634154. Tommy Smyth is Managing Director of Tom Smyth & Associates, a HR consultancy, established in 1991, which, in association with HAI, gives Irish employers practical advice on HR, industrial relations and employment law issues.

This Business Support article featured in the November/December 2017 edition of The Hardware Journal.