5 "invisible" human resource costs businesses need to cut immediately

In business, personnel costs is always one of the biggest expenses, especially for small businesses. small and medium enterprises and startups in VietnamIf not controlled and optimized effectively, this expense can become a financial burden, hindering sustainable development.

So what does human resource cost include and how to optimize it? no need to cut salaries or staff? Let's find out with Bizzi Vietnam through the article below.

I. What are personnel costs?

Personnel costs is all expenses related to employees in the enterprise, including salaries, bonuses, benefits, training costs, recruitment, and expenses related to human resource operations.

For most businesses, especially SMEs, this is an expense. accounts for the highest proportion of the budget. Therefore, optimizing human resource costs is key to ensuring financial efficiency, helping businesses maintain staff quality and improve competitiveness without having to cut staff.

In this article, Bizzi Vietnam helps businesses identify "invisible" human resource costs and suggests optimal and effective solutions to ensure sustainable development.

II. 5 “Invisible” Human Resource Costs Businesses Need to Cut

It's not just salary or bonus that counts. personnel costsIn fact, there are many "invisible" expenses that cause waste that businesses rarely realize.

1. Time cost

• Reason: Long meetings, cumbersome workflows, and repetitive steps.
• Affect: Waste hours of work every day, reduce productivity and cost businesses business opportunities.

For example: A 2 hour meeting with 10 employees attending is equivalent to 20 hours of work spent without bringing clear results.

2. Cost of recruiting and retaining employees

• Reason: High turnover rate, complicated recruitment process, costly advertising and training of new employees.
• Affect: Causes team instability, wastes resources and affects current employee morale.

According to a Gallup survey, the cost of replacing an employee can be up to 50-150% annual salary their.

3. Ineffective overtime costs

• Reason: Unreasonable work arrangement, lack of tools to support process automation.
• Affect: Overtime pay increases but work efficiency does not improve, at the same time creating pressure and stress for employees.

4. Cost of manual, repetitive work

• Reason: Employees must enter data, process invoices, and manually reconcile data.
• Affect: Staff are “buried” in tasks that do not create value, instead of focusing on strategic work.

Common bottlenecks: Accounting for 30-40% time just for data entry, while this job is completely possible automation by software

5. Facility and office costs

• Reason: Office use is inefficient, costs for electricity, water, stationery and equipment maintenance increase.
• Affect: Creates additional financial burden without directly contributing to revenue.

III. Causes of high labor costs

Personnel costs include not only salaries and benefits, but are also affected by many external factors. If businesses do not identify them early, this expense can growing rapidly out of control, directly affecting cash flow and profits.

Below is 4 common reasons for high labor costs:

1. Overtime pay increased sharply

According to Vietnam Labor CodeWhen employees work overtime, the company must pay:

• 150% salary on weekdays,
• 200% salary on weekends,
• 300% salary on holidays

If businesses do not optimize their work processes, it will lead to employees regularly working overtime, Personnel costs will increase very high, but actual performance does not increase proportionally.

For example: A company has 50 employees, each employee works overtime an average of 10 hours/month with a salary of 50,000 VND/hour → Total overtime costs can be up to 25 million VND/month, equivalent to 300 million VND/year.

2. Changes to overtime and benefits regulations

The State's labor policies are constantly adjusted to protect workers' rightsThis means that businesses will have to:

• Pay extra overtime for more employees.
• Increase mandatory benefits such as health insurance, social insurance, annual leave...

If the business does not update in time or does not have budget plan, personnel costs will sudden swelling, causing difficulties in cash flow.

3. Basic salary increases according to the market

Every year, the State adjusts regional minimum wage, resulting in:

• Basic salary increase,
• Social insurance, health insurance and unemployment insurance contributions increased accordingly.

In addition, in the context of fierce competition for human resources, businesses are also forced to salary and benefits increase to retain good employees, leading to increasingly high personnel costs.

4. Employee benefits and care

In order to build an attractive working environment, many businesses invest heavily in:

• Health care program,
• Travel, team building,
• Bonus, travel allowance, lunch…

Even though it brings long-term benefits, if not properly managed, reasonable control, these expenses may accounting for 20-30% of total personnel costs, putting pressure on the budget.

Identifying the cause clearly helps businesses proactively control and budget human resources, avoid overspending and affecting profits.

IV. Effective human resource cost optimization solution for businesses

Personnel costs are always a large expense in the total budget of an enterprise, accounting for 25 – 50% operating costs depending on the business model. To optimize without affecting the quality of human resources, businesses need to approach across the board (recruitment, training, operations) and depth (policy, culture, technology).

Below is 9 solutions that have been successfully applied by many businesses:

1. Clear human resource budget planning

Human resource budgeting is the first and most important step to avoid cost loss.

How to deploy:

• Determine business goals → human resource needs:

For example: Expected revenue increase by 30% → need to expand the sales department by 10 more employees.

• Classification of personnel costs:
  • Permanent: Minimum wages, insurance, benefits.
  • Change: OT, KPI bonus, seasonal recruitment.
• Prepare a contingency budget:

Estimate 5 – 10% total salary fund for situations: personnel changes, changes in social insurance policies, unexpected overtime.

• Periodic review and adjustment:

Review quarterly to ensure budget is in line with reality.

Suggest: Businesses can use human resource budget management software to track spending in real time.

2. Optimize recruitment costs

Recruitment is a long-term investment but also a major expense if not managed effectively.

Solution:

• Scientific staffing:

• • • Recruit only the number needed, based on performance data.
      

• Building a Candidate Persona:

• • • Identify the right skills, experience, and culture.
      

• Take advantage of low-cost recruitment channels:

• • • Internal referral with reasonable bonus (cheaper than headhunter 40 – 50%).
    • Industry groups on LinkedIn, Facebook.
      

• ATS (Applicant Tracking System) application:

• • Helps filter profiles, evaluate candidates quickly, and reduce interview time.
• Focus the budget on effective recruitment channel, for example, LinkedIn, Facebook Ads, or internal referrals.

Benefit: Discount 30-40% recruitment costs and increase the quality of input human resources.

3. Optimize training costs

Training is a long-term investment, but if done wrong it can be costly. burn the budget without any effect.

Saving solution:

• Online training:
  • Use Zoom, Google Meet or E-learning platform → save costs on room rental, printing documents, and travel.

• Leverage internal resources:
  • Veteran staff train new staff, combined mentoring to keep knowledge within the organization.

• Share training costs with partners:
  • For example, a steel manufacturing company might partner with an equipment supplier to organize joint training.

• Focus on core skills training:
  • Prioritize skill sets that directly generate revenue or reduce costs, and avoid scattered courses.

Result:

• Reduce 40 – 50% training costs.
• Staff are taught the right content, increasing work efficiency.

4. Improve workflow

cumbersome process waste of time and manpower, leading to high OT costs and low employee morale.

Improvement steps:

• Evaluate current process:
  • List all steps → identify bottlenecks → eliminate unnecessary steps.

• Standardize with SOP (Standard Operating Procedure):
  • Clear SOPs help new employees integrate quickly, reducing training time.

• Automate manual stitching:
  • For example: Use Bizzi software to automatically enter invoices, instead of entering them manually.

• Reduce the number of meetings:
  • Apply the principle: “A meeting only takes place when it has a clear goal and specific results.”

5. Optimize working time

Scientific time management helps reduce waste of resources and OT is not required.

How to deploy:

• Automatic timekeeping software application:
  • Direct connection to payroll system, avoid fraud.

• Smart shift:
  • Use sales or customer traffic data to schedule flexible shifts.

• Productivity tracking:
  • Evaluate individual employee performance based on KPIs, not just hours worked.

6. Build a transparent salary and bonus policy

A reasonable salary and bonus policy will retain good staff while still controlling the budget.

Popular models:

• Pay by product/revenue:
  • Suitable for sales and production.

• 3P model:
  • Position (position) + Person (ability) + Performance (result).
  • Helps allocate budgets fairly, encouraging performance.

• Flexible Bonus:
  • Project or peak period bonuses instead of fixed monthly bonuses.

7. Outsourcing non-core activities

Focus on core operations, outsource ancillary work to save fixed costs.

Activities that should be outsourced:

• Recruitment freelancer or part-time during peak season.
• Hire a tech company instead of building an in-house team.
• Hire accounting, human resources or IT support services in a package.

Benefit:

• Reduce long-term salary, insurance and benefits costs.
• Flexibly expand or contract resources as needed.

8. Using human resource management technology=

Technology is long-term solution to reduce costs and increase efficiency.

Applying technology helps:

• Application of technology in production and business: Automate processes so employees can focus on more important work, reducing the need to hire additional workers.
• Apply online meetings: Save on travel, printing, and meeting room rental costs.
• Using management software: To save and optimize working time for human resources, for example, professional human resource management software can reduce the number of personnel needed for manual work.

9. Control and reduce other operating costs

In addition to direct costs related to personnel, many indirect costs also affect the budget.

Saving solutions:

• Save electricity, water, and stationery with internal regulations and IoT technology.
• Liquidation of excess materials, recycling of waste.
• Share an office with another business or use a co-working space.
• Renegotiate insurance, maintenance or logistics contracts.

V. Bizzi solution helps businesses optimize human resource costs

In the context of human resource costs increasingly accounting for a large proportion of the total budget, many businesses are facing difficulties in ensuring operating efficiency, fit optimize human resource costs.

Bizzi.vn – platform Comprehensive financial automation and cost control – is specifically designed to solve this problem. With smart features, Bizzi not only helps businesses manage cash flow but also reduce waste of human resources budget, while improving team performance.

Below are 3 outstanding solution groups from Bizzi to support businesses:

1. Automate manual tasks – Save time and costs

In businesses, accounting and finance teams often spend many hours on tasks. repetitive such as entering invoices, checking documents, reconciling debts... This is the reason for increased personnel costs and reduced productivity.

How to deploy with Bizzi.vn:

• Use OCR feature and automatic invoice entry on Bizzi to remove 90% manual operation.
• Connect directly to accounting, ERP and banking software for automatic data synchronization.
• The process of approving invoices and documents is carried out. online, fast, reducing paperwork and administrative staff costs.

Benefits:

• Save 50 – 70% manual accounting processing time.
• Help employees focus strategic mission like financial planning, cost analysis, instead of just doing data entry jobs.
• Reduce the need to hire additional staff for operational tasks, thereby optimize fixed personnel costs.

2. Controlling expenditures and human resource budgets – Transparent and accurate

One of the reasons why personnel costs are rising is lack of budget control for categories such as recruitment, training, compensation and benefits. Bizzi.vn provides Bizzi Expense – Smart expense management solution, helping businesses budget control and allocation tight from the start.

How to deploy:

• Establish standard budget for each specific department, project, or activity (e.g., recruitment, staff training, team building).
• Integration online spending approval process: All expenses must be approved before implementation, limit unplanned expenses.
• Monitor real-time spending reports to identify over-budget items.

Benefits:

• Control human resource related expenses such as recruitment, training, OT and benefits, Reduce waste up to 25 – 30%.
• Financial transparency, easy to evaluate investment efficiency for each human resource activity.
• Support leadership in making fast, data-driven decisions.

3. Effectively manage business expenses – Reduce costs

Business expenses are one of the variable costs large and difficult to control, including travel, accommodation and food expenses of employees. Without a clear management process, businesses can easily encounter the situation overspending or fraudulent billing.

Bizzi Travel – Bizzi.vn's specialized features – help businesses per diem management from AZ, ensuring cost optimization and process transparency.

How to deploy:

• Establish standardized business expense regulations: spending limit for each position, area, and type of work.
• Staff Submit approval requests and pay online right on the system.
• Automatically store and reconcile invoices, travel and accommodation documents.
• Integrate cost analysis reports to evaluate work performance.

Benefits:

• Reduce 20 – 30% incidental business expenses, especially in businesses with sales or project teams that travel frequently.
• Transparency, limiting the situation of false declaration or fraud in business expenses.
• Save time on approvals and payments, improving the employee experience.

Conclude

Optimize human resource costs not only a short-term goal but also a long-term strategy for sustainable business development. In the context of increasingly fierce competition, effective human resource budget management will help businesses: reduce waste, increase profits, improve competitiveness, and at the same time attracting and retaining talent thanks to transparent and fair policies.

To achieve this, businesses need to combine modern human resource management strategy with digital technology applications. Bizzi.vn is a pioneering platform in the field financial automation, providing a comprehensive human resource cost control system. With Bizzi, businesses can:

• Reduce manual work, optimize internal resources, helping employees focus on strategic activities.
• Tight control of expenses related to recruitment, training and travel expenses, avoiding waste and loss.
• Ensuring transparency, make decisions based on accurate and real-time financial data.

Bizzi is it powerful tool help businesses optimize human resource costs and towards sustainable growth. Start your journey to digitize your financial processes today to cut costs, improve management efficiency, and expand the growth potential for the business in the future.

For more detailed advice on suitable solutions for your business, register here to schedule a demo: https://bizzi.vn/dat-lich-demo/