Companies without HR: How much does it really cost?

CEOs, entrepreneurs, business leaders... Many of you want to hire an HR professional, but you hesitate due to budget concerns. 

What if we reversed the perspective? In this article, we will take a closer look at the costs of not having an HR department in your company and why investing in an HR department (internal or external) is more than just an expense—it is a necessary support for the success of your business.

Ignoring this feature may seem like a short-term saving, but hidden costs can quickly add up. Here are four of them.

Our TOP 4 hidden costs

1. Decreased productivity and demotivation: 

An HR department ensures that employees are engaged, happy, and satisfied. Without this, there can be a significant drop in productivity. 

Cost: Get out your calculators to simulate an increase in absenteeism, a loss of a few percent in productivity... it quickly adds up 😕

Concrete example: A study conducted by Gallup revealed that companies with engaged employees are 21% more productive. Imagine the loss if your employees are disengaged...

2. Increase in recruitment costs: 

Without an HR department, recruitment often falls to your managers or yourself. Here are some recurring problems you have probably encountered: not enough time is devoted to it, you don't know how to do it, and this increases the risk of hiring the wrong people. 

Cost: Expenses, time, and salaries paid before you realize you've made a mistake in hiring... What if you make three hiring mistakes a year? 🤯

Statistics: According to the SHRM, the average cost of a bad hire can be as high as 50% of the employee's annual salary.

3. Potential legal and compliance issues: 

A lack of HR expertise in labor laws can lead to costly lawsuits and significant penalties for non-compliance, not to mention the negative impact it has on the company's atmosphere.

Cost: Ask your colleagues, they will surely tell you that they would have liked to avoid it. ⚖️

Tip: In addition to the money, these matters are stressful and will distract you from your business. That may be the biggest hidden cost.

4. Damaged company reputation: 

A company with a poor HR track record can see its reputation damaged, making it difficult to attract and retain the best talent. 

Cost: How much does turnover cost you? Run a simulation and you'll be surprised💸

Impact on the brand: According to Emploitic.com, a poor reputation could reduce the number of applicants by 50%.

Solutions and recommendations:

After this demonstration, backed up by figures and arguments, it is crucial to understand that investing in an HR department is not a cost but a strategic asset. Here are a few recommendations:

Assess HR needs: 

Start with an internal audit to identify gaps and specific needs within your organization. This includes reviewing recruitment, training, performance management, and legal compliance practices.

For greater objectivity, call on HR consultants to obtain an objective assessment and personalized recommendations.

Training managers: 

Ensure your managers understand the basics of talent management and compliance. This may include training on recruitment, performance management, labor relations, and legal obligations.

Encourage a culture of continuous development where managers are regularly updated on HR best practices.

Outsourcing HR: 

If you cannot afford to hire, consider outsourcing certain HR functions or hiring a part-time HR professional. This allows you to benefit from HR expertise without incurring the costs of a full-time position.

More and more HR consultants are offering their services in combination with Talenteo.com HR and payroll software to optimize costs. 

Would you like to discuss this with professionals? VisitTalenteo.com