Save 2K per worker by being more efficient behind the scenes

Oct 11 2006 by Nic Paton Print This Article

British businesses could save up to 2,000 a year for every new full-time employee they take on by better managing their back-office administration processes, a new report has suggested.

Cutting the number of back-office staff and getting rid of duplication, often through the use of shared HR services, would help slash what it costs to hire, induct and train new and existing members of staff, the study by accountancy firm PricewaterhouseCoopers LLP has found.

Payroll administration alone cost some companies under 30 per full-time employee a year and others nearly 80.

Long-term absence case administration costs some companies more 850 while others spent only 350.

The exit process could cost as little as 10 per leaver but as much as 95 for some businesses.

Firms spent between 20 and 100 per full-time employee on training and development administration annually, it found. The biggest differences were found in the cost of recruitment. Some HR shared services reported it cost an average around 700 to recruit an external candidate, while others reported nearly triple this rate, said PwC. Richard Phelps, a partner at PricewaterhouseCoopers LLP, said: "Measuring the performance of HR shared services over a period of time has enabled us to see benefits in terms of improved cost and service delivery.

"However, there is clear evidence that successful execution of the shared service concept takes between four and five years to start paying off in these terms.

"Companies that wish to attain these benefits and savings need to measure, track and benchmark their performance in this area. Effective and efficient administration of human resources is a cornerstone of a higher performing workforce," he added.