In an era of economic uncertainty, organizations are increasingly focusing on slow growth projections and adapting to fluctuating market conditions.
HR departments, under pressure to retain top talent and demonstrate value, must strategically manage costs. This is the core message of a newly published blueprint from McLean & Company, a global HR research and advisory firm.
Optimize HR costs
The blueprint, titled “Optimize HR Costs,” emphasizes the importance of proactive cost optimization as a strategic HR practice. It suggests that HR leaders should align their spending with organizational strategy and expected business value. This alignment, McLean & Company argues, will help manage resources and showcase HR’s contribution to the organization.
“Especially in times of economic pressure, cost optimization can quickly lead to cost-cutting, which ultimately perpetuates the unhelpful ‘do more with less’ cycle,” said Lexi Hambides, Director of HR Research & Advisory Services at McLean & Company. “While resourcefulness and cost optimization are important skills for HR leaders, it is a disservice to both the HR team and the organization at large to accept this ‘more with less’ challenge without advocating for optimal team workloads and investment for the future.”
The resource explains that cost optimization is not merely about cutting costs but involves a comprehensive, strategic decision-making process. This includes reducing unwarranted HR spending, optimizing cost-to-value ratios, and sustaining cost optimization results. Given the unpredictable financial landscape, McLean & Company advises HR leaders to balance proactive and reactive initiatives for strategic, data-informed decisions.
Three-step process
The blueprint outlines a three-step process for HR leaders to follow:
- Prepare and Evaluate: Assess factors impacting the organization’s financial outcomes, establish HR cost optimization goals, and select metrics to monitor progress.
- Uncover and Prioritize Cost Optimization Initiatives: Identify negotiable and non-negotiable constraints, brainstorm and shortlist cost optimization initiatives, and create a cost optimization roadmap.
- Communicate and Iterate: Develop strategic and tactical communication plans, build an executive presentation, align communication to promote strategic change management, and monitor progress and outcomes of the cost optimization initiatives.
McLean & Company underscores that cost optimization should be an ongoing practice, embedded into HR’s culture to reinforce HR as a strategic leader within the organization.
For a detailed understanding of the process, HR leaders can access the complete blueprint on McLean & Company’s website. The firm also offers additional resources to support informed cost reduction decisions, reinforcing HR’s strategic role.
McLean & Company will host its premier industry conference, Signature, from October 27 to 29 at the Red Rock Casino Resort & Spa in Las Vegas, Nevada. The event targets future-focused HR leaders, offering insights into various HR trends and practices.