Should I scale back our HR?


A. Derek Kemp of Liquid HR writes:

With a reduction of that size you are right to consider reducing all support functions proportionately. The trick in reducing HR costs is to work out whether it will create more problems than the financial one it solves. The risks are: a loss of efficiency, where senior managers end up spending all their time on HR; exposure to costly litigation, due to policies and procedures not being kept up-to-date; and a loss of control, because outsourcing administration is difficult to achieve without loss of time and effectiveness.

My advice is to keep some administration in-house, but introduce an HR system that reduces it to a minimum. Plenty of companies offer a ‘self service’ proposition which is ideal. Employees complete and confirm their own details, and managers can approve holidays, and manage absenteeism through it. Any system you choose should provide continually up-to-date policies and offer legal advice usually for a flat fee … always check what is included. Finally, one or two administrators to deal with recruitment, training and to maintain personnel files are needed. This saves on the cost of a manager and probably saves on external employment law fees too.

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