5 strategies to reduce labor costs for 2023 (2023)

The year 2023 promises new challenges for HR departments. Economic burdens such as rising inflation rates and high energy costs are putting pressure on companies and employees alike. As a result, the focus will be on both cost control and cost reduction. (Topic also covered earlier this yearblog entryby our CEO Avtar Jasser.)

In this blog post, we discuss five crucial HR strategies that can help organizations manage costs while improving employee engagement, retention, and overall performance.

1. A people-first approach

A “people first” approach is a key strategy that needs to be implemented in all aspects of HR and leadership. Keep your people focused, lead with a human approach, make sure your people's needs are met, and make sure they have a good experience.

Imagine a people-first approach to combating current trends like “The Great Redundancy” (the tendency of employees to quit their jobs in droves, often due to economic and social disruption caused by the COVID pandemic). -19) and Quiet Quit. ’ (refers to employees who quietly leave their jobs, often out of dissatisfaction).

Leading and supporting employees with an authentic, agile and empathetic mindset is crucial to retaining them, which in turn is important to avoiding unnecessary costs and keeping your organization on stable ground. A recent Gartner studyGartner's top HR priorities for 2023, found that leader and manager effectiveness is the top priority by 2023 and ranked as the top priority by 60% of HR leaders.

In addition to the benefits for employees, a human-centric approach is also closely linked to more corporate success. a study byGallupshows that companies that prioritize the well-being of their employees tend to achieve higher sales as well as higher customer satisfaction and employee engagement.

In short, taking a people-centric approach and making sure your employees feel supported will result in long-term cost savings, as well as increased productivity and morale.

See our previous article for more tips on getting in touchthe blog.

2. Prioritize performance management and learning

Performance management and learning to improve and develop your employees will be more important than ever in the future. This is evident in the success of software company Adobe and food giant Cargill, both of which have seen significant improvements in employee engagement and retention by implementing more flexible and continuous performance management approaches.

Adobe reports that the employee's absenceTaskby up to 30% shortly after adopting a more flexible approach to performance management. Likewise, Cargill reported that 70% of employees felt unwellmost appreciatedB. through regular status meetings or check-ins with your superiors.

Retaining and developing talent internally is vital for any business as it ensures the business has the right expertise to meet current and future needs. However, talent and skill development requires structured and systematic oversight by HR and management teams.

To ensure success, organizations should consider implementing a performance management strategy that includes regular check-ins, clear performance expectations, and opportunities for growth and development.

Additionally, providing employees with educational and career development opportunities can help retain top talent and attract new hires, thereby reducing hiring costs.

These initiatives will not only save money in the long run, but also create an environment where employees feel valued and motivated to do their best. By focusing on performance management and skill development, organizations can realize a number of benefits including increased productivity, greater employee engagement, reduced costs and better retention rates.

You can find more information on this on our pages on the subjectContinuous performance managementj.

3. Focus on employer branding and employee engagement

Attracting and retaining top talent is a challenge many companies face in today's competitive business environment. Employer branding and employee engagement are critical elements in overcoming this challenge and achieving retention and recruitment success.

A strong employer branding strategy is essential to attracting and retaining top talent. This means that you are clear about the culture and values ​​of your company and how they align with the needs and goals of potential employees.

By collecting employee feedback, employers can gain valuable information that they can use to make improvements that benefit both the company and its employees. In addition, employee feedback can also be used to identify areas where costs can be saved or processes improved for greater efficiency.

to perform regularlyThe pulse surveyThis allows organizations to understand how employees are feeling and identify areas for improvement. By acting on this feedback, companies can improve the employee experience and increase retention rates.

4. Be aware of cycle fatigue

In order to survive the changes in the working world, many companies had to implement changes in their projects and organizational structures. However, surveys show that employees are becoming increasingly jaded and resistant to these changes.

2016 orChanges to the Gartner Workforce Surveyshowed that 74% of employees were willing to change their work behavior to support organizational change, but that number has fallen to 38% by 2022. This is a clear indication that employees are fed up with constant change and are resisting it.

Change fatigue can negatively impact employee engagement, productivity and even turnover. It can also hinder the success of major organizational changes.

To resolve this issue, we recommend that you communicate the benefits of the changes to your employees and provide them with support and resources to adapt to the changes. Regular check-ins and feedback sessions can also help employees feel supported and valued during and after the transition.

If you are interested in learning more about this topic, we encourage you to watch our on-demand webinar.“Everything changes again. Do your employees suffer from "change fatigue"?

5. Automate processes and introduce digital HR systems

HR departments are under increasing pressure to improve efficiency and data quality. One solution to this challenge is the introduction of digital HR systems and processes. A digitized HR function with high quality, securitypersonnel master datait is essential for operational human resources.

When information is stored in multiple systems and data quality is low, tasks tend to be time-consuming. As the workload increases and priorities conflict, the risk of analysis and reporting becoming less reliable increases. Poor data quality and the lack of reliable analytics make it difficult to make fact-based strategic decisions. Also, with bad data and reports, you risk making wrong decisions, which in turn can have unnecessary (and potentially expensive) consequences.

The introduction of digital HR solutions can help to avoid these problems. By centralizing HR data and automating processes, digital HR solutions can improve data quality and accuracy, and increase efficiency. In addition, through a secure flow of HR master data, other departments have the trusted data they need for budgeting, vacation, and security access and management.

Digital staffing solutionsYou can also improve decision-making by providing real-time insights into employee data. This can help managers identify trends and patterns and make more informed decisions about managing, recruiting and retaining talent.

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In summary, 2023 looks set to be another challenging year for HR with a greater focus on cost control and reduction.

By implementing a people-first approach, adopting digital HR solutions, prioritizing performance management and learning, and adopting flexible work arrangements, companies can manage costs while improving employee engagement, retention and overall performance.

At CatalystOne, we understand the importance of profitable HR strategies and are here to help organizations meet the challenges of the year ahead. We recommend keeping these strategies in mind and making sure they are incorporated into your 2023 workforce plans. By implementing these strategies, you will help your organization remain stable and better positioned to thrive in the year ahead.