2 Figure 1: HR SilosFigure 1 shows some of the typical HR silos. Past thinking was that the best way tomanage HR Spend was to optimize each individual program in the different silos. Buttoday perceptive managers are challenging that thinking
and they are gettingbetter results.There may be good historical reasons for the existence of HR silos, but if we weredesigning a HR strategy from the ground up, we would not have them.Whenever you have silos, there are inherent inefficiencies. Opportunities forsynergies are missed.
The result is the “Silo Surcharge” –
extra money paid by thecompany unnecessarily. There are 3 kinds of wasted HR spend:
Hidden costs. These are costs that are not transparent, because they arebundled into the price paid for a product or service. Examples are
commissions and 401k asset management fees.
Errors, omissions, & avoidable costs. Many costs fall into this category. Someare the direct result of having duplicated data and processes that spanmultiple silos. Just one example is overpaying insurance premiums due toerrors in deductions, synchronization between systems, and setup issues.
Opportunity costs. Some opportunity costs translate into hard dollars
suchas missing out on available tax credits
because HR doesn’t have the
bandwidth or expertise to put tax-advantaged programs into place. Other
costs are “soft” dollars –
but still very real
springing from the time that HRprofessionals have to devote to researching issues, answering questions, andtracking down errors that arise when HR systems are in silos.
There is a Silo Surcharge, but companies don’t recognize that they are paying it.
These unnecessary costs go undetected for months or years, because they are partof the business-as-usual approach to HR Spend.