TL;DR

Mid-market companies can maximize people spend by aligning HR budgets with business goals. Focus on retention, strategic recruitment, and leveraging technology for efficiency and ROI.

Table of content

1. Why Aligning People Spend with Business Goals Matters
2. The Strategic Approach to People Spend Optimization
3. Practical Steps for Mid-Market Companies
4. Real-Life Success Stories
5. Key Takeaways: Making the Most of Your People Spend

‍

Introduction

People costs—salaries, benefits, training—are typically the largest expense for any business. Yet, for mid-market companies juggling growth and limited resources, the challenge isn’t just managing costs but ensuring every dollar aligns with business goals. In today’s dynamic market, optimizing "people spend" is no longer just a financial exercise; it’s a strategic imperative.

This article dives into how mid-market companies can rethink their approach to people spend, maximize ROI, and build a workforce strategy that drives business success.

‍

Why Aligning People Spend with Business Goals Matters

The Role of People Spend in Business Success

People aren’t just a cost—they’re your business’s engine. Whether it’s customer-facing employees or the back-office team keeping everything running, your workforce is critical to achieving your objectives. People spend encompasses everything you invest in your employees: salaries, benefits, development programs, and more. When aligned with business goals, these investments drive productivity, innovation, and revenue growth.

The Challenges Mid-Market Companies Face

Mid-market companies often walk a tightrope. Growth ambitions clash with rising HR costs, post-pandemic complexities, and inflation. On top of that, many struggle with visibility—what’s delivering ROI, and what’s simply a drain on resources? This lack of clarity can lead to reactive decision-making, like cutting headcount or halting training, which often causes more harm than good.

The Opportunities in a Data-Driven World

Here’s the good news: workforce data is your ally. With the right tools and strategies, you can transform people spend into a business driver, aligning your HR budget with long-term goals. By embracing a data-driven approach, mid-market companies can stop guessing and start planning effectively.

‍

The Strategic Approach to People Spend Optimization

Step 1: Conduct a Comprehensive Audit

You can’t improve what you don’t understand. Start by auditing your current HR processes and spending:

• Identify inefficiencies: Are manual tasks slowing down your HR team? Processes like onboarding or payroll can often be automated to save time and reduce costs.
• Prioritize high-impact areas: Look at where your investments make the biggest difference. Retention strategies, for instance, can save money by reducing turnover and rehiring costs.

A clear picture of where your money is going is the first step to aligning your spend with your business goals.

Step 2: Invest Where It Matters

Not all costs are bad—some are essential for driving long-term results. Focus on areas with high ROI:

• Retention and engagement: Losing top talent is expensive. Invest in programs that improve employee satisfaction, such as recognition initiatives or growth opportunities.
• Strategic recruitment: Instead of reacting to every vacancy, think long-term. Build internal mobility programs to upskill employees and reduce reliance on costly external hires.

Step 3: Use Technology to Amplify Efficiency

Tech can be a game-changer in optimizing your people spend:

• Automate repetitive tasks: Tools for onboarding, payroll, or compliance reduce administrative burdens and free up HR teams to focus on strategy.
• Leverage predictive analytics: Planning tools help forecast future headcount needs and costs, ensuring you’re prepared for growth or market shifts.

‍

Practical Steps for Mid-Market Companies

Align HR and Finance Teams

HR and finance don’t always speak the same language, but when they collaborate, the results can be transformative:

• Collaborate on forecasting: Align your workforce strategy with your financial projections. Shared goals and metrics ensure everyone is rowing in the same direction.
• Scenario planning for flexibility: Prepare for various outcomes—whether it’s rapid growth or economic slowdowns—so you can adapt without scrambling.

Simplify Processes and Structures

Complexity can be a hidden cost. Simplifying your HR processes and structures can free up resources:

• Streamline policies: Simplify comp plans or performance review structures to reduce administrative overhead.
• Implement scalable solutions: Use tools that grow with your company to avoid costly replacements down the line.

Benchmark and Track Performance

You can’t improve what you don’t measure. Use benchmarks and KPIs to evaluate the effectiveness of your people spend:

• Compare with industry standards: Are your compensation packages competitive? How does your turnover rate compare to peers?
• Track KPIs: Metrics like engagement scores, turnover rates, and training ROI can highlight where to double down and where to cut back.

‍

Key Takeaways: Making the Most of Your People Spend

Build a Sustainable Strategy

Optimizing your HR budget isn’t about slashing costs—it’s about ensuring every dollar drives value. Focus on alignment, efficiency, and long-term gains to build a people strategy that scales with your business.

Your Action Plan

• Conduct a thorough audit of your people spend.
• Collaborate across HR and finance for shared decision-making.
• Invest in technology and processes that enhance ROI.

‍

Conclusion: Moving Forward with Confidence

Mid-market companies can’t afford to view people spend as a static expense. With the right strategy, your workforce investments can become a powerful lever for growth. By aligning HR budgets with business goals, embracing data-driven decisions, and focusing on long-term value, mid-market leaders can turn challenges into opportunities.

Now’s the time to rethink how you invest in your people—and to ensure that every dollar you spend is moving your business forward.

‍