McLean & Company emphasizes embedding cost optimization practices into HR's culture for strategic leadership
Global economic uncertainty has led many organizations to brace for slow growth in the coming years.
HR departments now face increased pressure to retain top talent, demonstrate tangible value, align strategically with organizational goals, and manage HR costs effectively.
McLean & Company has released a blueprint titled ‘Optimize HR Costs,’ emphasizing the need for proactive cost optimization as a strategic HR practice. This approach will help manage resources and costs while highlighting HR's contribution to the organization.
“Especially in times of economic pressure, cost optimization can quickly lead to cost-cutting, which ultimately perpetuates the unhelpful 'do more with less' cycle," stated Lexi Hambides, director of HR Research and Advisory Services at McLean & Company.
“While resourcefulness and cost optimization are important skills for HR leaders, it is a disservice to both the HR team and the organization at large to accept this 'more with less' challenge without advocating for optimal team workloads and investment for the future,” she continued.
McLean & Company explains that cost optimization is a comprehensive and strategic decision-making process, not merely cutting costs. It involves reducing unnecessary HR spending, optimizing cost-to-value, and sustaining cost optimization results.
While cost optimization is proactive, financial landscape changes can lead to unanticipated budget cuts and cost-cutting mandates.
McLean & Company advises that a comprehensive cost optimization plan for HR should include both proactive and reactive initiatives, enabling strategic, data-informed decisions ahead of future cost-cutting mandates.
The recently published blueprint by McLean & Company outlines a three-step process to optimize HR costs. HR leaders can follow these steps to align HR spending with organizational strategy and manage finances proactively:
First, prepare and evaluate. This step involves evaluating factors that impact the organization's financial outcomes, establishing HR cost optimization goals, and selecting metrics to monitor progress.
Second, uncover and prioritize cost optimization initiatives. This step requires determining negotiable and non-negotiable constraints, brainstorming and shortlisting cost optimization initiatives, and identifying criteria that will impact the implementation of these initiatives.
Then, create a cost optimization roadmap.
Finally, communicate and iterate. This involves planning strategic and tactical communications, building an executive presentation, and aligning communication to promote strategic change management.
Additionally, it is crucial to plan to monitor the progress and outcomes of the cost optimization initiatives.
McLean & Company reminds HR leaders that while metrics may indicate that cost optimization objectives have been achieved, cost optimization is an ongoing business discipline.
Embedding cost optimization practices into HR's culture positions HR as a strategic steward of resources and reinforces its role as a strategic leader within the organization, regardless of economic conditions.
