As can be seen with the demise of the mighty Enron, effective HR management is an integral part of any business. It’s about paying attention to detail and that means counting dollars and cents where it matters. For accountants, glaring mistakes are often noted on their client’s financials and nowhere is HR mismanagement more evident than on the income statement. Manual HR processes tend to leave too much room for interpretation, which could leave the employer open to risk. With the right systems in place, not only can employers reduce their risk but also improve their bottom line.
Choose The Right Talent The First Time
The statistics are not in favor of an employer where a bad hire is concerned. The U.S. Department of Labor estimates that a bad hire costs the company at least 30% of that employee’s first-year earnings. Onboarding new staff members cost businesses thousands of dollars and that figure spent on the wrong person is a tough figure to reconcile when the hire is bad. A good hire, on the other hand, will have a direct accounting effect which the figures on the income statement will reveal.
Invest In Staff Growth
Richard Branson says “Train people well enough so they can leave, treat them well enough so they don’t want to”. A well-spent investment on staff will ensure that the bar is raised in the company which means a direct effect on the sales. An improved sales turnover contributes to a healthier income statement. An investment in staff is a direct investment in the workforce and very rarely does this investment have a nil return. The effect is not only felt on the production floor but can also translate to employee interactions with customers, which have a direct effect on sales. It can also lead to an in-house accountant or bookkeeper to keep track of those numbers while the business focuses on what it does best.
Opt For Effective Workforce Management Tools
One of the biggest loopholes to affect an employer’s bottom line is ineffective workforce management. This is because there is no way to carefully monitor the comings and goings of staff, and leave management is not properly documented or transparent. Staff can be empowered through workforce management tools as they are able to manage themselves more effectively, placing less pressure on supervisors and managers. Developers Advanced Systems Inc suggest integration of different aspects of workforce management can be key to streamlining and effective, efficient business practices. It provides management will have a bird’s eye view of the workforce at any given time.
Is The HR Department Profitable?
Profit is the main topic of conversation when business owners sit down with their accountants. It’s not often that business owners look at the HR department purely from a profitability perspective, however, this is a division that can add directly to the bottom line. According to research, at least 50% of a company’s profit relies on the internal happenings of the business. There are a number of ways the HR department can make or break a business, and one of those is legal considerations. The right contracts and preventative measures ensure that the business focuses on other areas that help build profit.
Human capital is one of the biggest assets in any business, and time and money spent developing this side of the business often reap great rewards. The HR department is at the heart of every business and has a direct impact on the income statement, a very important consideration for any business owner.