THE CRITICAL IMPORTANCE OF TRANSITIONING HUMAN RESOURCES FROM A COMPANY COST TO A REVENUE GENERATING ENABLER

Whether a company’s human resources functions are staffed by a person a team or a PEO partnership, the department plays a critical role in making certain that the organization is “right sized” to serve its customers and clients. But that’s not all. HR professionals ensure employees are paid accurately and on time. They hire, onboard, and train and new staff members. They manage benefits and stay up to date on federal and state employment policies. And that’s just the tip of the iceberg. In short, without a competent and detail-oriented human resources unit, countless businesses would simply cease to exist. While HR has been rightly viewed as a critical, central company function for several decades, it was long considered a necessary fixed cost for doing business, supporting staff and avoiding risk. However, that’s simply not the case anymore. Not by a long shot.

THE ONGOING EVOLUTION OF HR

In reality, the role of the human resources department has been evolving for quite some time. Even the term “human resources” is in flux with the appointment of chief people officers instead of HR executives at major companies across the U.S. and abroad. So, what’s behind all this transformation? In many cases, companies are becoming acutely aware that their employee-focused functions play an increasingly important role in ensuring business growth and profitability. Conversely, when these same services do not receive the attention they require, the impacts – including frequent turnover, losses in client and customer trust and costly regulatory fines – can quickly transform a highly functioning organization into a business that’s fighting for survival. This recognition, that human resources plays a pivotal and irreplaceable role in ensuring a healthy company future, led me to create BestFit PEO Solutions, where we serve as a general agency that employs our deep industry knowledge to identify the best PEO solutions for small or medium-sized businesses, based on their individual needs.

And while many companies are in the midst of updating and upgrading their human-focused functions, some see the need, but don’t know where to start. Here’s how any organization – large or small – can ensure their HR leaders and PEO partners make certain that employee-centered operations make good business sense and help place the company on the path for a healthy future.

GETTING A HANDLE ON RISING BENEFITS COSTS

Most Americans are acutely aware of the increasing costs of healthcare and that trend is expected to continue in 2027. Recently the insurance broker Aon projected a 9.5 percent increase in health insurance costs in the months ahead to average a price tag of more than $19,000 per employee. With predictions such as this, the buying power of professional employer organizations is more important than ever, giving small and medium sized businesses access to plans and rates they would never be able to consider on their own.

EMPLOYING ADVANCED AI TECHNOLOGIES IN HR

In addition to unparalleled benefits access, professional employer organizations can also arm SMBs with technology that helps maintain profitability in several crucial areas including employee recruitment engagement and retention. For example, artificial intelligence can be used to handle time-consuming and challenging tasks, such as identifying employees with hard-to-find talents by rapidly analyzing regional, national or even global LinkedIn entries and other social media networks, saving precious time and money while locating individuals that will help advance the organization’s mission. Once, hired, virtual orientation assistance can help ensure staff are familiar with company policies and receive the training they require to excel. Artificial intelligence can even be deployed to improve the employee experience and help guarantee critical staff remain in place. Engagement algorithms can be used to identify and address workplace frictions that generate stress and anxiety while AI can reduce time spent on frustrating tasks that feel overly burdensome and add to the problem of reduced morale.

SHIFTING THE MINDSET

In many cases, companies not only need to adjust their HR practices, they also need to shift their thinking. That means making sure human resources professionals are “plugged in” and have a seat at the table when financial decisions are discussed and made. A company’s people data – including the expected internal impacts of any major company shift – should be discussed and considered when navigating the organization’s future. That means companies with PEO partners need to make sure this data is being gathered and analyzed regularly. At the same time, human resources leaders must regularly consider the financial side of the house and when needed, think in terms of costs and benefits to the overall company when providing input and ideas.

IDENTIFYING AND ADDRESSING RISKS BEFORE THEY BECOME COSTLY ISSUES

One way that human resources can protect profits is by avoiding costly errors. Professional employer organizations help do this by ensuring compliance with all applicable national and state employment regulations and navigating complex situations, such as remotely based employee populations that cross state lines. PEOs also have the resources and know-how to track upcoming regulation changes and ensure proactive or immediate compliance once these federal or state-based requirements are in place.

ASSESSING PROGRAM VALUE ON A REGULAR BASIS

Most workplaces have a wide variety of programs and benefits aimed at increasing engagement, building a sense of community and retaining top performers. But these programs need to evolve with the organization, along with the changing values of the employees they are intended to serve. This is why companies should regularly assess the cost vs. the return of each individual HR program and whether they support the overall needs of the organization and its employees. If doing less in one underutilized or undervalued area allows a company to launch new initiatives that will better support employee satisfaction and engagement, don’t be afraid to make these data-based changes.

MAKE HR MATURITY A GOAL

The Society for Human Resources Management encourages businesses to maximize their organization’s human potential by operating with a high level of HR maturity, meaning they provide much more than basic employee-support functions. A professional employer organization can help a company increase HR maturity by optimizing talent, increasing engagement and driving the business forward by ensuring that daily team efforts fully align with the company’s core values, mission and goals. Furthermore, human resources information and insights are factored in when decisions are made and new strategies for gathering additional employee-focused data are routinely considered and employed.

For those who remain skeptical about the need to evolve the role of human resources, consider this: An organization’s investment in people can vary widely. In service heavy sectors, labor costs can reach as high as 70 percent. Even in retail sales – where part-time staffing can help reduce costs – maintaining a high performing employee population requires a major share of revenue costs – around 20 percent or more. When it comes to the many factors that can impact a businesses’ likelihood of success or failure, people always play a critically important role. As a result, modern, forward-thinking companies treat human resources as a highly valued revenue enabler, not simply a calculated monthly cost.