Pair Assignment

Human Resource Management Challenge in

Cost Containment

Submitted to:- Bruno Mignardi

Email:- b.mignardi@slc-alpha.ca

Submitted By:- Gurvinder Singh Bhatti (4302536)

Baljinder Singh Nehal (4295934)
Introduction

The rapidly transforming business expansion means there are many human resource

challenges which are faced by the human resource department from last couple of decades.

The role of human resource management is critical in every business. The major challenges

are changing in the marketplace and economy, globalization, technology, cost containment

and leveraging employees differences. Human resource department really adding the business

values to their organizations. The business expansion in the global world really creates

the many differences between the employees and management. Every time human resource

department come with new effective strategies. Every organization focuses to maximizing

the profitability with less invested on the employees. Cost containment is the one major

challenge for the human resource department. Human resource department being able to

managing the cost cutting strategies and adding the values to achieve the organization

objectives. In this assignment we are discussing the cost containment and how it is

effecting the human resource department.

Containing cost

if we are discussing about the most common challenge for the every businessman, the first

come in our mind is to reduce the cost in the organization. Cost containment is the process

of reducing the cost in a business or at limited level. Cost containment is the business
practice of maintaining expense level to prevent unnecessary spending or thoughtfully

reducing expenses to improve the profitability without long term damage to the company.

In many business companies implemented the cost containment strategies to reduce the

cost and increases the profitability the organization. Through the cost containment measure

keep expenses in check. This might include marketing expenses to a certain percentage of

sale, capping labor spending per month or setting a daily expense level. Conduct monthly

review on these policies to determine if spending limits reduce opportunity to improve sale,

revenue and profit.

If human resource department manage the overspending during the crucial time of company

helpful to improve the profitability of the company. It helps the better return on investment

in such areas as marketing, hiring employees instead of using contractors, buying on credits,

negotiation and buying own building instead of renting.

Human resource containing cost challenges and impact -

1. Controlling benefit costs - Every small and big company competing their benefits

with other companies for recruiting and retaining their employees. There are four

major types of employment benefit companies offering medical insurance, life

insurance, disability and retirement plans. To reduce the such kind of benefits cost

human resource department keep their employees up to date on healthcare reforms

and regulations. They implement the proper training and development programs to
 minimizing the hazardous in the workplace. Proper training for risky jobs reduce

the level of risk.

2. Increasing job satisfaction level of employees – Employee’s satisfaction is also

create lot of challenge for the human resource management. Most of time employee

get exhausted from the workplace, when something not happen in the favour their

efforts. Less employee’s satisfaction increasing the employee turnover rate. It important

for human resource management to retain their workforce for the long term. The

reward and recognition. Involve and increase employee engagement. Develop the skills

and potential of workforce. Evaluate and measurement job satisfaction. These are some

techniques increase the satisfaction.

3. Downsizing – Downsizing refers to the process of reducing the size of workforce by

terminating the employment of employees. It is also referred as layoff. Downsizing

is common in a recessionary situation where downsizing helps to cut costs. Some

companies also layoff a percentage of low performers every year to maintain a

competitive and efficient work force. Employees are exit are often compensated by

paying a fixed amount or a few months salary. Downsizing not only affects the

employees who have to exit the company, but also the remaining employees who

may fear themselves to be in a similar situation at a later time.

4. Outsourcing – Human resources outsourcing is when businesses hire companies to

manage personnel functions. That includes the administration of health benefits plans,

retirement plans, and workers’ compensation insurance. It also includes hiring,

 training, and legal expertise. The top two reasons for outsourcing are the benefits

of cost and time efficiencies. These efficiencies are really the opportunity costs of

business owners and managers, who lose time and money focusing on human

resource tasks when these resources can be spent on what must be done to grow

their business. That is the time and money devoted to employee management is

better spent by outsourcing human resource so that businesses can be devoted to

core business functions.

5. Offshoring - Offshoring is the process of relocating a business or business process

to another country in order to benefit from reduced labour costs or a more beneficial

regulatory environment. A range of processes are commonly offshored, including

manufacturing, IT, customer service and research & development. Impact of

Offshoring is some time controversial for a number of reasons, including reducing

the economic benefits to the home country and the number of jobs available to

locals, and potential exploitation concerns over mass employment of cheaper labour

in the destination country. Service levels of companies offshoring customer service

may also be affected, often due to the culturally-driven mismatch in expectations

that can occur. It may cause the crucial effect back-shoring, which means bringing

back a business process from an offshore location to the original country of operation.
Conclusion

It is very challenging for the human resource management to control the cost of organization

and maintaining at limited level. Human resource department always ready to implement

such different strategies which are helpful improve the productivity of employees and meet

the organisations goals. Human resource management should be aware that the workforce is

constantly changing. Whether it is changes in health care laws, an aging workforce, changes

in technology or an increasingly diverse workforce the fact remains that human resource

managers must always be attuned to the changes in the external environment in order to

plan for and maintain the workforce necessary for the company to achieve its goals.
 works cited

https://smallbusiness.chron.com/definition-cost-containment-66172.html

https://shrm.org/resources

https://www.americanexpress.com/en-us/business/trends-and-insights/articles/10-simple-ways-

to-cut-business-costs/

https://www.mbaskool.com/business-concepts/human-resources-hr-terms/

https://www.hrzone.com/hr-glossary/what-is-offshoring