Types Of HR Costs And How To Reduce Them

January 15, 2024

A human resource department is one of the main constituents of a successful business. It involves overseeing internal and external business-related matters that include maintaining the culture and wellbeing of the company. Some of the important HR tasks include recruiting, onboarding, orientations, maintaining payrolls, retention, training, employee benefits – making up for an overall office culture. As an overarching department that provides a wide range of services, several kinds of costs are HR costs are associated with it.

HR costs are important to note during determining the overall budget for business of varying sizes. This section talks about five main human resource costs.


This is the top main HR process that involves finding the best suited candidates for the company’s varied roles. Some of the associated costs with this process include job postings, advertisements and campaigns, applicant screening and the interview process itself. The cost may differ for different sized businesses and their complexity during the screening process. It not only uses money as a resource but time and effort too.


These are all the costs that fall under the category of retention – maintaining an engaged and suitable work environment for all employees. The cost of replacing a leaving employee can cost 50 to 60 percent of their annual salary. Hence, it is important to companies to retain their employees for a longer time period for maximum value. In order to do that, retention costs must be included such as competitive benefits and incentivization, growth opportunities and positive work environment.

Training and Onboarding

Another HR cost includes training and onboarding which involves in-house orientation and training for new employees. This should be viewed as an important investment as it gives a first impression of any workplace to a candidate and can influence the person’s decision to work for the long term.

Employee Benefits

Incentives and rewards are additional HR costs which are supremely important to maintain a sense of hard work between employees. It is also dependent on coverage options and policy details including insurance, travel and food allowances, commissions and retirement costs.


HR administrative tasks also have a value attached to them. These costs include having to invest in technology and software to support various HR operations.

Hiring An HR Firm Can Reduce Overhead Costs

Outsourcing HR operations can be a cost-effective solution in the long run. It can help merge all activities under one umbrella giving businesses an exact cost for all administrative activities. HR consulting firms are often project based offering customized solutions for administrative activities. They also have capacity to scale up and down depending on the current needs complying to policies while being fully committed to the growth and success of any business. It gives you a peace of mind knowing an outsourcing company is responsible for well-integrated HR doings.

Contact Us

ElevationHR caters to businesses of all sizes in Houston TX providing them HR solutions for smooth operations. Dial us at (281) 353-8847 for service related queries.

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