4 Hidden HR Costs and How To Eliminate Them With HCM Technology

When you think about HR costs, obvious expenses like salaries and benefits likely come to mind. But look beneath the surface, and you’ll find a number of more subtle areas quietly chipping away at your bottom line. Fortunately, modern human capital management (HCM) technology offers solutions to reveal and eliminate costs like these so you can move your business forward with greater efficiency and savings. Today, we take a look at four hidden costs that could be impacting your business without you even realizing it.

1. Productivity losses during recruitment 

The hidden cost of recruitment isn’t just the money you spend to find and hire new talent. It’s also the lost productivity that occurs when a position remains open. The longer the role goes unfilled — and the more critical the position — the greater the impact on your team’s efficiency and business performance.

To mitigate these losses, you need a recruitment strategy and process in place that ensures you can minimize time-to-hire and productivity losses. More often than not, technology is an essential part of this equation.

Here are a few examples of how an HCM technology, such as our UKG Ready solution, can help: 

• Self-service applicant portals: HCM platforms that offer self-service tools, like an applicant portal, allow applicants to apply, track application status and receive communications without manual HR intervention. By giving applicants the ability to manage the process themselves, you can keep applicants engaged while reducing the administrative burden on your people.
• Informative dashboards: The benefits of having information in one place cannot be understated. Leveraging a dashboard directly inside of an HCM technology puts information at your team’s fingertips and allows them to fill openings with greater speed and efficiency. Rather than burning time pulling data from various locations, hiring managers can simply log in, review job requisitions, applicant details and statuses, work through checklists and more.

Recruiting metrics: Flying blind is never a good strategy. HCM technology that tracks key metrics like time-to-hire and time-to-fill helps you identify bottlenecks and inefficiencies in the recruitment process. Some systems even allow you to drill down to understand these metrics by location, manager and role, allowing for deeper analysis and optimization.

2. The true impact of employee turnover

The true cost of employee turnover goes far beyond the obvious expenses of recruiting, onboarding and training replacements. What often gets overlooked are the less visible, long-term impacts on your existing team. Every time someone leaves, remaining employees not only have to take on extra work, but also the stress of continually training new hires. This distracts them from their critical projects and can lead to declining morale. At the same time, when experienced team members leave, they take valuable knowledge and specialized skills with them, causing knowledge gaps that can lower overall productivity. These hidden costs quietly erode the effectiveness and well-being of your workforce and, if left unchecked, can result in a cycle of lost momentum and revenue.

Promoting from within can be an effective way to boost employee retention and prevent the domino effects that accompany turnover. After all, who doesn’t love a promotion? It gives employees opportunities for growth, makes them feel valued and can boost job satisfaction — all ways to prevent turnover. That said, an internal promotion is only effective if you’re confident you’re matching the right people to the right roles. 

This means understanding your workforce. Is an employee strong in the skills needed to move up? Are they interested in the position? Do they have the right experience and qualifications for that next step? Knowing what the job requires and where your team members excel helps you make informed decisions about internal promotions that actually support your retention efforts.

Some HCM platforms offer succession planning tools to evaluate employees based on objective metrics and performance scores. This makes it easier to identify top internal candidates who are capable of stepping into key roles. Succession planning no longer lives in one-off documents or conversations. HR and hiring managers can quickly pop into your HCM technology and see who is in the pipeline for each role and update plans as people move, get promoted or leave the company. Your team works more efficiently, and employees have visibility into the unbiased process used to determine their trajectory within the company. A win-win. 

3. Striking the right balance in compensation

Paying your employees is an obvious (and unavoidable) cost. Less obvious is striking the right balance. If you pay employees too much, you could be wasting money. Pay too little, and you might struggle to bring on the right talent and retain employees who are truly helping your organization succeed.

One key way an HCM technology can help you strike this perfect balance is through a compensation manager tool. Tools like this allow you to build merit matrices that link performance ratings directly to compensation increases. You can define specific percentage increases for different performance levels (e.g., excellent, above average, average or below expectations) which creates a standardized framework for compensation.

Some HCM platforms can also provide pay grade structures and rules that prevent employees from being compensated outside of approved ranges. This helps ensure internal equity and compliance with established compensation policies. When a proposed increase goes beyond the approved pay range, the system can alert designated managers, giving them the opportunity to make appropriate changes.
Striking the right balance in compensation helps ensure you are not overspending on roles that don’t require it or underpaying your top performers who drive your organization’s success. With HCM technology guiding compensation decisions, you can allocate resources wisely, reward employees fairly and build a workforce that is both cost-efficient and high-performing.

4. Time theft

Whether intentional or unintentional, time theft is a silent drain on productivity and payroll costs. It occurs when employees are paid for time they did not work, often due to inaccurate time tracking, early or late punches, buddy punching, extended breaks and more. While each instance may seem minor on its own, the compounded effect over time can be substantial, especially across large teams or multiple locations. Left unchecked, time theft not only inflates payroll expenses but also creates compliance risks and can erode trust between employees and employers.

Here is how the right HCM technology can help:

• Seamless data collection: Relying on spreadsheets or punch cards to track time creates unnecessary exposure to time theft. A more secure and efficient solution is to use data-collection hardware that integrates directly with your HCM technology. When employees clock in and out through a connected device, their hours flow automatically into your system — eliminating manual entry, reducing opportunities for time manipulation and ensuring payroll and HR data remain accurate and consistent.

• Biometrics: Time clocks that leverage fingerprint, facial recognition or other biometric methods help verify employee identity, reducing the risk of buddy punching and ensuring clock-in and clock-out records remain accurate and reliable.

• Geofencing: Virtual boundaries can be established using geofencing technology to ensure employees only clock in and out from approved work locations. This helps prevent misuse of mobile apps that might otherwise allow punches from unauthorized areas.

• Notifications and alerts: System alerts within an HCM solution can notify managers of timecard issues such as long breaks, early arrivals, missed punches and other time and labor violations, helping reduce time theft.

Maximizing ROI with UKG Ready

While hidden HR costs can quietly impact your bottom line, the right HCM technology can help you uncover and eliminate them. Our HCM solution, UKG Ready, not only streamlines processes associated with recruitment, turnover, compensation and time tracking, it also delivers measurable returns.

By reducing inefficiencies, improving data accuracy and supporting smarter workforce decisions, UKG Ready helps you save time, reduce turnover and control labor costs. The savings you gain in these areas often pay for the solution itself, making it a worthwhile investment that continues to deliver value over time.

Ready to see how UKG Ready can help your organization identify and eliminate hidden HR costs? Request a demo today.