The Three Levels of HR Costs

The Three Levels of HR Costs

Why your Human Resource costs may be more significant than you ever expected, and a cost cutting solution for your HR department.

HRBP in Denver Colorado

Regardless of the size of your company predictable costs are key to sustainable growth. Yet, most businesses substantially underestimate their HR costs, which can lead to some unpleasant financial surprises. It’s true, many companies overlook the fact that the cost of Human Resources doesn’t end with the cost of benefits. The cost of HR administration and intangible HR costs, (such as employee turnover, disputes, litigation) must also be included when considering the overall cost of HR.

If considering these costs causes your heart to speed up and results in a nervous sweat, we understand taking care of your employees is expensive! Fortunately, there is a professional, sustainable solution for reducing the costs so many of us overlook. The result is happy employees, full compliance, and an HR budget that doesn’t break the bank. Here are some tips from us, a Denver HR outsourcing firm.

The Cost of Benefits

Benefits are expensive, and oftentimes a major selling point when it comes to encouraging top talent to join your team. This cost may include health plans, health savings and reimbursement accounts, dental and vision plans, long-term disability, 401(k) and profit-sharing plans, life insurance, and more.

The Bureau of Labor Statistics estimates that in 2021, benefits accounted for 31% of employee compensation costs. This major price tag is most likely why many companies rely heavily on this estimate when calculating their overall budget, but it does not paint the whole picture of human resource expenses.

The Cost of HR Administration

If you conduct your HR in-house, don’t forget to include the cost of your HR employee’s salary into your budget! According to Payscale, the average cost of a Human Resource administrator is just over $50,000. And if you plan on growing significantly in the future, the cost of hiring another HR rep should also be added to your bill.

Before you begin to pile HR duties onto your plate to save a buck, consider the time and money saved  by having a dedicated HR solution at your company, regardless of its size. HR is an integral part of a thriving business, and professional talent is key to ensuring employees stay happy, and your company stays in compliance.

Intangible HR costs

Intangible HR costs can be difficult to estimate because they often come as a surprise or pop up when least expected (consider all your HR costs associated with navigating the Covid-19 pandemic!) Because of this, intangible HR costs are one of the most challenging aspects to plan for.

These costs may include employee turnover, disputes, and litigation.  Low production and low quality of work are also considered intangible costs (and are often associated with low employee morale, a side effect of an ineffective HR solution) You don’t know what the future holds, so estimating these kinds of costs can be especially daunting, time-consuming and expensive!

A Sustainable Solution for Cutting HR Costs

There is a solution for high-quality human resource solutions that put professionalism at the forefront while saving you money. Comprehensive, outsourced HR solutions, such as those offered by OnePoint can effectively reduce the costs of benefits, administration, and intangible HR costs by allowing any organization to have the level of care and services of a human resources department within a large corporation. The result is decreased cost across all three levels of HR costs.

Your HR solution shouldn’t break the bank. There is a professional, no-hassle way to give your employees the care they deserve. When you are ready to understand what type of HR solution may be most beneficial for your business, reach out! Helping you save money while taking care of your employees is what we do best.