When evaluating the success of your business, it’s important to recognize what components played a role in making this success possible. New equipment may have helped and a new marketing strategy may have also contributed, but one of the most often overlooked and most valuable resource that many companies have is the professionals that work for them.
Employees aren’t often thought of as “resources” because they offer greater value than the average business resource, whether it be funding, equipment or the rest. Because of this perspective, the cost of both losing and finding an employee comes as a shock to many business owners. To avoid these potentially devastating costs, incorporating human resource management is a crucial part of any business strategy.
The Cost of a Good Employee
Naturally, the cost of losing an employee goes hand-in-hand with the cost of finding a new one, which includes the cost of paying someone to find and filter through potential candidates, training the new employee, and so on. These expenses are more or less expected, but other less common expenses– such as higher employment costs, time spent managing employee records and changes in payroll — can certainly add up as well.
Emphasizing the expense of losing and finding a talented and qualified employee may not have as much of an impact without letting the figures speak for themselves. According to the Institute for Research on Labor and Employment at UC, Berkley, turnover in management positions can frequently cost up to 150 percent of the employee’s salary. Although this 150 rate applies to virtually any position, managers can typically cut costs in salaries for unskilled workers who may replace a more experienced, thus, more expensive, employee.
Strategizing to Preserve Human Capital
To promote better management of human resources, experts at the University of California, Davis offer the following helpful advice for saving money and ensuring more effective business proceedings:
- Look Beneath the Surface. The interview went well and the candidate brought forth an impressive resume, so what’s missing? An employee can only be properly evaluated when an extensive background check, reference check and review of his or her permanent personnel file has been conducted. This is necessary to ensure from personal resources (rather than quantifiable ones) that the candidate is in fact a verified, efficient employee.
- Weigh Shortcomings Fairly and Objectively. Many hiring managers make the mistake of too quickly forgiving weaknesses and problems that affect the candidate’s ability to perform well on the job. As a human resources manager, it’s important to constantly remind yourself that your job is not to politely overlook shortcomings, but to honestly evaluate the candidate’s fit for the job.
- Apply Standards Equally: Evaluating candidate potential and maintaining high standards for all employees is crucial to running a smooth business and preventing feelings of discrimination or undervaluing. Set specific standards, rather than general ones, regarding exceptions, expectations and privileges to maintain consistency in the workplace.
Determining an ultimate solution to managing human resources is a highly complicated process simply because it involves subjects that are less predictable and scientific than other, more measurable resources. Although finding success in this field may require an extensive trial-and-error process, keeping the advice above in mind will help you dodge some of the more common pitfalls that many HR professionals face on a daily basis.
Thompson, M. (2012, February 14). How Much Does it Cost to Hire a New Employee? Retrieved April 11, 2012, from http://businesssearch.dnb.com/small-business-information/how-much-does-it-cost-to-hire-a-new-employee/
The Regents of the University of California, David Campus. (2010, December 13). Top Ten Tips for Managers and Supervisiors. Retrieved April 11, 2012, from http://www.hr.ucdavis.edu/supervisor/Er/Tips