One way to control HR costs and manage employee expectations
Employees don’t always understand how and why their company’s Human Resource programs are designed. As the top HR person in a given company you learn that compensation, benefits, and other programs cannot satisfy every employee. Most programs are developed for the majority needs and sometimes, offer choices to employees with different needs.
What strategic principles should guide sound HR program development? Over time I developed this list. I use it in HR Strategic Planning but find it also helps to quell employee critique focused on dissatisfaction with one narrow program aspect like: “my salary is not high enough.” or, “If salaries were higher, we could fill our openings faster.”
Five basic HR design principles
To ensure company success; sustainability; and quality service to clients/customers, sound HR policies and programs balance ALL of the following five competing goals:
- What the company needs to ensure the achievement of business goals;
- What employee groups desire from their workplace;
- What company competitors offer to employees;
- What is mandated by law;
- What the company can afford to provide.
The best programs achieve the optimum balance of these goals. For lower cost programs employee preferences might have a greater influence. For programs with a high price tag the company may have to set a budget and work within that number. Something many companies fail to do is communicate the actual cost of the HR programs offered. Communicating the overall cost of HR programs along with the four principles mentioned above usually moves employee understanding forward in a helpful way.
As profit margins and cash flow are squeezed in today’s environment many companies must dial back employee compensation and benefits to previous levels. With the right communication program, however, employees can understand and accept these changes especially when they can keep their jobs.