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“Free” Can Be Costly

The word “free” when used in retail product marketing can be comical at times: an advertisement claims that when you buy three snow tires you will get the fourth free! There are also more nuanced marketing that distinguish between “free” and “absolutely free” if you buy within the next 30 minutes! Such frivolous use of the word free might work well in retail environments but can have very costly consequence when used in marketing the services and tools of a profession – like human resources (HR).

Same word: different meaning

Employee Rights

Why are so many HR products offered for “free”?  Do you get your taxes done for free? How about advice on employment matters from a lawyer? What sets the HR profession apart – why is the word “free” so prolific in the marketing of products by HR vendors?

Does the frequency of use diminish the profession’s credibility in the eyes of end users? We would argue yes. After all, why would an organization need expertise from an HR professional when you can download a free template or access free HR? This unfortunately seems to be pervasive in small businesses that would not think twice about paying for the professional services of an accountant or lawyer. Does the promise of “free” HR solutions create a breeding ground for future business liabilities? Yes again.

Let’s take a deeper dive into areas where the promise of free HR can be costly.

Professional services comparison

Through an informal study we observed the frequency of use of the word “free” across the legal and accounting professions since they are interconnected with activities within HR’s core accountabilities. We randomly looked at the websites for five employment law firms in Toronto to observe their use of the word “free”.  Beyond an initial consult, none offer any free services or products. We conducted a similar review of accounting firms. Not surprisingly, the same results were observed.

Generally, more established businesses are aware of the interconnectivity between HR, accounting and legal professions. For example, similar to accountants, HR professionals play a significant role in managing a firm’s fixed costs. In fact wages, benefits and all other HR costs combined typically account for the largest percentage of a firm’s operating expenditures. Also, the recently proposed Fair Workplace Act (Bill 148) encourages collaboration between the HR and accounting departments to identify accruals related to specific employment practices (e.g. vacation, leaves) and minimum wage impact on payroll.

However, when you rely on “free” template downloads to guide your decision-making in key HR areas, like developing employment contracts or handling terminations, you are effectively relying on the lowest rung of the expertise ladder to guide your organization. At best, templates are data collection tools. They are not a replacement for knowledge in areas such as termination that require a substantive understanding of workplace legislation like Employment Standards and Human Rights.  If no one in your company has this expertise, and you rely on a template solution to develop related employee policies and practices, then you may be accruing future liabilities – which can lead to a couple of related “L” words: lawsuit and lawyer.  It’s not likely that an employment lawyer will endorse a template approach for dealing with terminations. Similarly, purchasing an accounting program does not alleviate all accounting related work – you still need an accountant to use it effectively.

Legal and accounting firms reaffirm their value by offering services in exchange for money.  If you want legal or accounting services, there is an associated cost. Think of it another way – you get what you pay for! The proliferation of free HR offerings has also likely diminished the value of the HR function relative to accounting and legal roles.

This seems interesting as the profession continually strives to assert its business value by an on-going focus on accreditations.

Free is Risky

The promise of “free” HR products/services should have the same initial impact on your firms’ risk management and employee relations effort as the thought of a car with only three snow tires – skepticism. Relying on “free” HR tools and products will likely keep your accountant happy today – hey, you’re managing costs right? It will also likely make your lawyer happy tomorrow – “I didn’t know what I didn’t know” is not a sound legal defense. If people are your most important asset then invest in them through HR advisory services. Pay now or pay later – nothing is free.

By Dave Nanderam, Senior Associate Consultant at ASSOCIUM.
Co-author: Geetha Sukumar, ASSOCIUM Consultants


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