Look For the Hidden Costs and Find the Hidden Savings
Guest feature by: Deneen Macedonia, Business Development Consultant, Trion Solutions
One of the main struggles of operating a nonprofit can be in the infrastructure and internal operations of the organization itself. Overhead and non-core functions can divert resources from where you need them most. Unlike a typical business, inefficiencies don’t just impact your bottom line; they directly affect your mission and the community you serve. Controlling costs plays a critical role in program efficiency, allowing dollars to flow where they matter most. It is important to look for efficiencies across all areas of your organization, not just your core operations.
One of the biggest cost centers for nonprofits is the overhead associated with the employees who carry out your mission. Benchmarks suggest the true cost of an employee is typically 1.25x to 1.4x of base salary, when taxes, benefits, and overhead are considered. Within that “true cost” lies significant opportunity to create efficiencies and preserve valuable resources, including both money and employee time.
HR-related expenses such as benefits, employee administration, and compliance can add up quickly. It’s a constant balancing act: controlling costs while offering the HR services and benefits your employees demand. Nonprofits can face higher turnover rates than the private sector, making a competitive benefits package essential for attracting and retaining top talent. A structured review of your HR functions can help identify areas for improvement and ensure you’re getting the most out of every dollar.
Keep an eye on HR.
Monitoring your HR Expense Factor (Total HR Expenses / Total Operating Expenses) allows your organization to identify when HR costs are growing faster than the rest of your expenses. Capturing the full picture matters, many HR costs are embedded throughout the organization and easy to overlook. Items such as employee time and other organizational resources consumed by HR-related tasks need to be accounted for. With an accurate accounting of HR expenses, you can dig into the details, identify contributing factors, and determine whether operational adjustments are needed or whether alternative solutions should be explored. Early detection is critical, as many HR inefficiencies are recurring and can quietly erode your budget for months or even years.
How to review your HR functions:
Reach out to your current providers.
Are you getting the best rates available? Is there a more cost-effective option? Regularly reviewing your current providers ensures you’re getting what you paid for and that you still need everything you’re paying for.Review for overlap.
Are there overlapping features between providers? Can you reduce or consolidate? Is a single-source provider an option?Explore alternative solutions.
The HR landscape has evolved rapidly alongside technology. Many of today’s solutions offer better service at a lower cost, and the trend toward a decentralized workforce has created many new options that could be a better fit for your organization.
The cost of compliance disadvantage.
The size of your organization directly affects these HR-related costs. Smaller organizations typically pay more per employee to accomplish the same tasks as larger organizations that benefit from economies of scale. Most nonprofits fall into this category; the U.S. Small Business Administration defines a small business as under 500 employees and revenues under $7.5 million. The fixed costs of compliance hit smaller organizations disproportionately hard. One path forward is to join a Professional Employer Organization (PEO) or a Group Purchasing Organization (GPO), allowing smaller organizations to pool their buying power and access the same economies of scale typically reserved for much larger employers.
Is it time to take a closer look?
If your HR Expense Factor is climbing, your staff is spending significant time on administrative tasks, or you simply haven’t done a structured review in some time, the opportunity cost of inaction is real. Many nonprofits find that the savings uncovered through a thorough HR review, whether through consolidated providers, renegotiated rates, or outsourced administration can be redirected directly to programs and mission-critical work. The question isn’t whether efficiencies exist. It’s whether you’re capturing them.
About Trion Solutions: Customized HR Solutions for your nonprofit.
As a Professional Employer Organization (PEO), Trion Solutions provides a comprehensive, single-source Payroll, Benefits and HR solution designed with nonprofits in mind. Customized solutions allow Trion to serve organizations of any size, from those with just a few employees to organizations with hundreds of employees.
Trion creates value for your organization through creating efficiencies, implementing best practices, and leveraging economies of scale. Access to Tron’s experienced team of HR professionals and a robust service and technology infrastructure relieves the administrative burden of HR so your organization can stay focused on its mission. From Payroll and Benefits Administration to Regulatory Compliance and Workers’ Compensation, Trion handles the complexity of HR, so you don’t have to.
Learn more about Trion Solutions at RelyonTrion.com or contact Deneen today!
Deneen understands the challenges nonprofits face from the inside, as a nonprofit board member herself. She has helped multiple nonprofit organizations identify and solve HR inefficiencies that were quietly undermining their missions. Contact Deneen today to learn how Trion can be a fit for your organization.
Deneen Macedonia | Trion Solutions | 248-498-8400 | RelyonTrion.com