14 Tips to Drive Revenue in HR

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14 Tips to Drive Revenue in HR

HR may not always be able to directly contribute to the bottom line, but there are a number of impactful ways that it can help drive revenue. Here is a list of 14 things your HR department can do to drive revenue at your organization.

  1. Win over talent from your competitors. Win over the best talent with better compensation, benefits, opportunities, and a more attractive workplace.
  2. Retain your top producers. Figure out what will make top performers stay and create a strategy to keep them at your organization.
  3. Pay for performance. Create an incentive program directly tied to profitability. Whether that's a bonus program or profit sharing program, it should produce performance gains.
  4. Be selective. Be choosy with your benefits offerings. Select benefits that matter most to your top talent. You may administer 20 different benefits when just 5 are used and valued.
  5. Incorporate drivers of revenue into performance management. Understand the drivers of revenue in your organization and make sure those are measured in the performance evaluation process.
  6. Train smarter. Conduct a training needs assessment to prioritize and identify critical training needs across the organization. Use high quality training methods that lead to behavior change.
  7. Track ROI. Link wellness to health insurance usage; training to performance improvement; engagement to profitability gains. Showing ROI helps build a business case for HR and reinforces its value.
  8. Improve medical and leave management. Administering employee leave more efficiently and choosing an effective Managed Care Organization (MCO) are ways that you can help employees get back to work in less time and reduce the drain of medical leave and workers compensation costs.
  9. Measure what matters. Measure HR cost factors (i.e. compensation cost, benefits cost) and revenue per employee. Know what your top HR costs are and how those compare to other organizations.
  10. Implement time-saving systems. Digitize HR data and record retention. Make it easy for employees and managers to access and use the information you collect so that they can focus on producing results.
  11. Identify obstacles to revenue generation. Lead performance improvement efforts, suggestion and feedback programs, and other means to help identify opportunities to increase revenue.
  12. Plan your workforce. Understand your organization's areas of growth and ensure that you are stacking those areas with top talent. Workplace planning prioritizes hiring needs.
  13. Reduce legal fees. By choosing inexpensive legal resources and assistance, obtaining legal knowledge, and keeping your organization compliant, you can significantly reduce legal fees.
  14. Save on staffing. Hiring is arguably one of your most expensive HR areas. Reduce your cost per hire by taking advantage of staffing service discounts and using creative, inexpensive sourcing methods.

HR departments that drive revenue and results in their organizations take advantage of opportunities to save their organizations money wherever possible, identify opportunities to build up their top revenue producers, and simply manage HR smarter and more efficiently.

HR Project Support: Job Descriptions and Onsite HR Audit

10 Ways to Manage Pay & Performance

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10 Ways to Manage Pay & Performance

Most employees want the opportunity to earn more pay based on performance, but such initiatives can be difficult for employers to create and administer. Here are 10 things to consider when managing pay and performance.

1. Does your culture align with a pay for performance program?

To be effective, your organization’s culture should align with a pay for performance program. This means that your organization should be committed to rewarding, recognizing, and promoting top performance, and employees should be aware of this commitment. It’s also important that your culture conveys an atmosphere of fairness and objectivity. Otherwise, pay for performance programs will fall prey to perceptions of subjectivity and bias, limiting their effectiveness.

2. What are the goals of the pay for performance program?

A pay for performance program can have many types of goals such as to improve productivity; increase customer satisfaction; enhance product quality; generate more innovation; boost revenues and profits; or reward top performers. Most goals for a pay for performance program focus on improving individual, team, and/or organizational performance. Be sure that the goals of this program are relevant to the business’s goals and needs.

3. What types of performance criteria will be rewarded?

The goals you define for the pay for performance program help determine what types of performance criteria will be rewarded. For example, if your goal is to increase customer satisfaction, the performance criteria may be customer satisfaction scores, number of customer complaints, or general customer feedback. If your goal is to improve productivity, the performance criteria might be quantity of products created, number of processes streamlined, or behaviors that enhance efficiencies. You may also consider making the performance criteria number of goals achieved or the impact of goals reached.

4. How will performance criteria be measured?

Often employers rely solely on performance reviews to measure criteria for a pay for performance program (i.e. a rating of “5” gets the highest incentive). While performance reviews can be a helpful measure, more objective measures of performance that aren’t as susceptible to rating error, supervisory perceptions and biases, or an ineffective form, should also be considered and used to measure performance criteria. Examples of such measures include goal setting, observable behaviors, and actual results (financial, quantity, or quality measurements).

5. Who will measure the performance and make pay decisions?

Sometimes performance can be measured without an individual, but other times, especially in the case of goal setting, observation, and performance reviews, an individual will need to measure performance , typically a supervisor, manager, or leader. Because these measurements are subject to human error, it’s critical that individuals are trained appropriately. Additionally, your organization will need to determine who will make pay decisions. Will you leave this discretion to your managers, providing them a fund to distribute these rewards?  Will HR or senior leaders be involved in the process, and to what degree? Most organizations involve all three groups at some level.

6. What type of pay for performance will you offer for meeting this performance criteria?

Not surprisingly, the most common types of pay for performance are merit pay, individual incentives, and bonuses. These programs tend to be easiest to administer and focus on individual performance. Increasingly, however, we are seeing some employers offer profit sharing, gain sharing, and employee stock ownership programs. While more complicated to administer, these programs have tremendous value, providing greater transparency and line of sight into organizational performance, reinforcing teamwork and collaboration, and offering employees a greater stake in the organization – giving them a true sense of autonomy and ownership. We find that organizations are offering multiple types of pay for performance for different segments of their workforce. This is ideal when different behaviors or results are desired that don’t necessarily fit one reward approach.

7. How much pay will be based on performance?

The trick to determining how much pay will be based on performance is determining what percent or portion of pay will have an impact on employee motivation or specific results you are seeking. Generally, studies find that when only 2-3% of pay is tied to performance, this is not enough to motivate desired behaviors or results. We have seen organizations reserve 2-4% for salary increases (i.e. cost of living, across-the-board, or merit) and 5-15% for incentive/bonus payout (with 15% typically targeted for executives). For example, NorthCoast 99 winners, provide an average of 10.3% incentive/bonus payout to top performers, 5.6% to average performers, and 7.3% overall.

8. What is the timing of payout for the rewards?

Most employers pay out rewards annually, but depending on the type of program a monthly, quarterly, or biannual payout may be more beneficial. Annual payouts may help your organization better manage costs and ensure that you have the funds to pay incentives to employees; however, there are advantages to paying out more frequently. When rewards are distributed closer to the time they were achieved, employees are more likely to view them as objective and relevant to their performance. In addition, paying out more often reinforces an on-going performance culture in which performance matters all year – not just at year-end – and makes supervisors manage performance on an on-going basis.

9. How will the program be funded and what are you willing to pay (the budget)?

Most pay for performance programs are funded using organizational profits or revenues. In this way, organizations frequently make pay for performance dependent on at least two factors: individual or team performance and organizational performance. Each year, you may budget for a percentage of revenues or profits that will be used to pay for performance. Organizational performance would dictate whether payout can occur.

10. How will the program reinforce other HR programs?

Pay for performance, at its best, reinforces and complements other HR programs and total rewards initiatives. What you reward in a pay for performance program should be similar to what you reward in a recognition program and how you promote people. Be sure to send your employees consistent messages about the results and behaviors you’re looking for, otherwise, your message will be lost.

Variable Pay Plans and Incentive Programs

Variable Pay Plans and Incentive Programs

Variable pay plans can be used as a motivation and retention tool for top performing employees.

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