As companies grow, the need for HR support also grows. There is more hiring to be done, more training to be delivered, and an exponential increase in HR admin tasks. On top of that, there's the challenge of developing a long-term human capital strategy for the future.
In an ideal world, this additional demand would result in an increased HR budget. Business reality often means the opposite, however, and many HR leaders find themselves facing the challenge of doing more with less.
Pressure on HR budgets
If your HR team is under financial pressure, you're not alone. Right now, companies of all sizes are working hard to manage overheads and find efficiencies in departments such as human resources. Recent stats show that:
- 85% of HR teams are under pressure to reduce spending
- 37% of HR professionals say their top challenge is a constrained HR budget
- 34% of HR teams expect to reduce headcount in the next year
Despite these pressures, HR teams still need to be as effective as ever. Organizations are counting on a human capital strategy that nurtures a positive culture, builds winning teams, and delivers business goals.
It’s a significant challenge, even for experienced teams. How can HR reduce costs while also providing a better-than-ever service to the organization?
9 ideas for improving HR efficiency
There are a number of ways to optimize your HR function, including thoughtful investment in training and technology. Here are nine ideas to discuss at your next team meeting.
1. Map out your HR processes
An in-depth process review can be a valuable first step when seeking HR efficiencies. Ask your team to document each step of their regular routines, paying close attention to areas that involve a lot of manual work or hand-offs. It’s also helpful to ask for reports on errors and rework required.
This kind of overview
can help you identify waste and process bottlenecks. It’s also a good exercise if you’re looking at automation, as you can see the kind of repetitive process steps that are best handled by AI.
2. Standardize HR workflows
Discrepancies can easily creep into your HR processes, especially if you have teams in multiple physical locations. Different teams apply their own interpretations to the rules, resulting in varying outcomes within the organization.
Non-standard processes can be highly inefficient, leading to waste, errors, and disputes. It’s worth taking time to fully document your HR processes, looking for opportunities to make each workflow as efficient as possible. Educate everyone on these best practices and conduct regular checks to ensure consistency.
3. Invest in management coaching
Managers play a huge role in human capital strategy. Every day, leaders make decisions that impact their people: who to hire, who to promote, who to praise, and who to discipline. When managers get these decisions right, it can help reduce the overall HR workload.
That’s why leadership development and management coaching can have an impact on the overall HR budget. Targeted coaching can offer the best results, but you can also help your leadership team improve through seminars, mentoring programs, and offering self-directed e-learning resources.
4. Focus on retention
Replacing an employee can be costly, with expenses arising from hiring, onboarding, training and monitoring. These expenses are bad for the business and bad for the HR budget, as the HR team will be responsible for getting the new hire up to full productivity as soon as possible.
Staff turnover rates have an impact on HR efficiency, which is why HR teams need to focus on developing retention strategies. This usually starts by running pulse surveys and learning more about organizational culture. The team can then start tackling issues that cause people to quit, such as a lack of professional development opportunities.
5. Centralize HR data
Data is one of HR’s biggest strategic contributions to any enterprise. Rich data analytics can help organizations to make strategic decisions about growth, staffing, and productivity. Data also helps HR leaders refine their strategy and identify efficiencies.
Centralization is a vital part of data-driven decision-making. It’s important to have a central repository, such as your HRIS, where you can access the HR data and create insightful reports. Often, data centralization doesn’t even require a big IT investment. Your team just needs to be careful to use the right tools to log and process HR data.
6. Look for smart ways to use AI
Artificial intelligence is quickly becoming an essential part of HR. Some might say it’s happening too quickly, as many HR teams are still figuring out how to automate core tasks with their new AI tools.
There’s no one-size-fits-all approach to AI, so you might need to run some experiments. Look for areas where AI can add real value, such as candidate or employee communications. Run limited pilots to find the most efficient way to make AI part of your workflows.
7. Use your team (referrals and mentoring)
Your current employees might be an untapped HR resource. For example, a good employee referral can be much more cost-effective than advertising job vacancies, and often will provide better results. Referral programs work best when there’s a meaningful reward, but remember that you only need to provide such rewards when you make a successful hire.
Mentorship programs are also an excellent and cost-effective way to supplement your professional development strategy. Mentors can share advice, help people overcome obstacles, drive inclusiveness, and help preserve institutional knowledge. The best thing is that mentorship programs don’t require much investment—you simply need to connect learners with appropriate mentors.
8. Align HR with business strategy
HR is becoming more strategic, but most HR teams still exist downstream of the major business decisions. This is a missed opportunity, as HR experts can provide valuable insight that may help to shape the organization’s overall strategy.
HR professionals can also work with other teams to help drive revenue. For example, this excellent blog discusses the partnership between Talent Acquisition and Business Development teams in the government contracting space. When these functions align, they can create substantially improved outcomes across the organization.
9. Use fractional HR outsourcing
Rightsizing your HR team is always a challenge, especially during periods of growth. One solution is to use fractional HR outsourcing, which involves bringing in consultants on a flexible or part-time basis.
Working with consultants has some immediate benefits. There are no recruitment or onboarding costs, no benefits or payroll taxes, and your consultant will become productive on day one. Fractional consulting gives you even more flexibility, as you can choose the level of support you require and make adjustments when your needs change.
Making efficiency your competitive advantage
Budget constraints don't have to limit your HR team's impact. The nine strategies above represent proven approaches that successful companies use to do more with existing resources. The key is taking action systematically—start with one or two initiatives that align with your biggest challenges, then expand as you see results.
Your HR team's ability to operate efficiently while delivering exceptional employee experiences becomes increasingly important as your business grows. Companies that master this balance position themselves for sustainable growth and stronger cultures.
Ready to transform your HR efficiency? Helios HR specializes in helping mid-sized companies optimize their people operations:
- HR consulting - Strategic guidance to streamline processes
- HRIS consulting - Optimize technology for better workflows
- AI consulting - Upskill your team and become AI-ready
