From the Republican primary race, to the future of Health Care Reform, to employer tax cuts, it seems that 2012 can be dubbed, “The Year of Uncertainty.” However, despite the unknown, employers can take control of their future by focusing on three important employment strategies for the coming year. Those three priorities are: 1) containing employment costs; 2) Reducing employment risks; 3) improving employee performance.

In part one of this two-part series, we will discuss these three strategies and what they mean to employers. In part two we will analyze how employers can effectively implement these strategies into their organization.

Stabilizing operating expenses. Following years of flat sales, employers should investigate ways to manage a lower operating budget and to minimize unnecessary expenditures. While there are potentially hundreds of areas that can be considered, employment costs usually account for one of the largest percentage of expenses in any business. These expenses include hard costs, such as payroll and tax overhead, health insurance premiums, workers’ compensation insurance, legal and recruiting fees, and payroll processing costs. They also contain soft costs such as employment administration, employee training, responding to employee questions or complaints, employee reviews and general labor law compliance. Reducing these labor costs can have a significant impact an employer’s bottom line.

Reducing employment risks. With years of experience and research to support the claim, it has been well documented that there is a direct correlation between difficult economic periods and an increase in employment related lawsuits. Stephen C. Dillard, head of Fulbright’s global litigation practice, states “Generally, litigation rises in an economic downturn as regulators tend to step up enforcement, laid-off workers head to court, and companies need to file more suits in order to collect money owed.” To head off the potential of an employment-related lawsuit, employers should be diligent in training managers on appropriate termination policies, updating various employment forms and policies, and reviewing internal accounting and HR process to ensure they are in compliance with payroll-related labor laws and regulations. As the economy strengthens, employers may find themselves looking to rebuild their workforce. In preparation for growth, they should update employee handbooks and new-hire procedures, train management on proper interviewing techniques, and review all forms, new-hire packets and offer letters for compliance.

Enhancing employee performance. Even as companies begin to hire again, it will probably take some time before staff reach pre-recession levels. This translates to managers still trying to maximize productivity with their smaller workforce. With all the downsizing, reduced bonuses, and increased workload of the past years, it is obvious that employees continue to face a stressful work environment. Furthermore, both employees and management struggle to find a healthy balance between productivity and the decreased manpower. In order to maintain employee morale and commitment to work, employers are challenged to find new ways of motivating and incentivizing their staff to maintain a positive attitude while managing the increased workloads.

In our next post, we will discuss how Human Resources Outsourcing should be considered as a viable business solution to actualize these three employment priorities.