HR’s Role in Cost Reduction and Optimization

Driving enterprise-wide cost optimization

HR often has to make ad hoc cost-cutting requests

As the demand to deliver high-value services increases in tandem with the need to drive productivity, cost optimization remains high on the list of priorities for 92% of HR functions. However, HR leaders often respond to ad hoc cost reduction requests, leading to unintended consequences for the business.

Only 20% of HR functions consider their contribution to enterprisewide cost savings when planning for cost optimization programs.
We have a relentless focus on doing what really matters [and getting] good data as to costs and how they link to the business strategy.
Head of Talent Management, Fortune 500 Company

Cost optimization goes beyond cost cutting

To maximize cost savings, HR leaders should pursue cost optimization through both function-specific and enterprise wide programs. Cost optimization is a business-focused, continuous discipline intended to maximize business value while reducing costs.

Graphic displaying how to drive HR cost optimization across the enterprise.

Insights you can use

From helping HR functions drive baseline efficiencies to creating a sustainable cost optimization roadmap, Gartner makes sure that cost optimization is an ongoing, strategic discipline rather than an emergency-driven project or one-time undertaking.

How to Prioritize HR Cost Optimization Initiatives

Cost optimization efforts fail to yield their full potential when they are not systematically evaluated. Good cost reduction decisions require a clear and rigorous business-driven understanding of the relative investment, risk, time, impact and benefits of potential cost optimization initiatives.

What Employees Really Think About Cost Management

With nearly 80% of employees believing that their organization is likely to reduce costs in the next 12 months, understanding their perceptions of past cost-cutting programs helps HR plan future cost-saving initiatives and receive better workforce buy-in.

Don't Forget About HR Structure

HR leaders have increasingly applied more differentiated and specialized HR structures, but this has often resulted in conflict and duplication. CHROs must understand the tensions in different models, and tailor their structure based on their context, to deliver cost-optimized HR.

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