Is it possible to cut staff costs without firing people?

Is it possible to cut staff costs without firing people?

Keeping costs down is a priority for all businesses and that means eliminating any waste and constantly looking for ways that you can do things cheaper. But there are certain costs that you can’t avoid and often, they’re the biggest expenses, like staff costs. You can’t run a business without staff which leaves you in a tricky situation if you’re struggling to cover the cost of paying everybody.

The most obvious solution is to let people go but nobody likes firing people and often, it has a negative impact on your business because you’re losing good people. Good employees help to increase your revenue so if you start firing them, the savings you make may be canceled out by a drop in revenue.

Firing people can also have a big impact on morale and it’s likely that you’ll experience a drop in productivity, which will negatively impact your business even further. If you can help it, you need to find ways to save that money without getting rid of employees. Luckily, there are some simple ways to cut staff costs without firing anybody.

Train Employees Properly 

It’s not just about how much you spend on your staff each month, it’s about how much money they bring to the company compared with what you spend. If you have incredibly productive employees that are boosting revenue, that’s a good return on your investment. But if you have a salesperson, for example, that doesn’t make any sales, your investment is wasted. That’s why it’s important that you train your employees properly so they’re better equipped to do their job properly and they are more motivated to work hard. You aren’t spending any less on your staff but they’re bringing a lot more value to the business and increasing revenue, so you’ll find it a lot easier to afford their salaries.

 
Organize Shifts Properly 

If your employees work in shifts, you might be wasting money on inefficient shift patterns. Every business has their slower days and if you’re scheduling the same number of people on a busy day as a slow day, you’re wasting money. It’s far more efficient to move people around so you’re not paying for people that you don’t need on slow days. You should also look at crossover periods and see if you could schedule more efficiently so you aren’t doubling up on staff for no reason. You should use some shift planning tools from Deputy AU to make scheduling simple and make sure that everybody knows what shifts they’re working. You can also change shifts easily if you need to move things around. You’d be surprised how much you could save if you just shuffle things around a little. 

Small Pay Cuts 

If you’re in a really tricky financial situation and you can’t find any other way to save money on staff costs, you should consider a small pay cut before you think about firing people. Most people would rather take a small pay cut and keep their job and if you cut everybody’s pay, you’ll only need to reduce it slightly to save a lot of money. Just make sure that you explain it properly when you tell your employees and be prepared for some people to leave. 

Firing people should always be a last resort if you’re looking to save money because it has a negative impact on your business. Usually, there are other ways that you can save money before you have to start thinking about getting rid of people.

Gordon Tredgold

Gordon Tredgold is a leadership transformation expert ranked #25 in Global Gurus Top 30 leadership gurus for 2019. Over his 25-year career Gordon has led teams of 1000+ staff in Fortune 100 companies, delivered operational cost savings of $350m and transformed delivery (from <35% to 95 %) and service levels (from 57% to 99.7%). A critically-acclaimed author, Gordon's latest book, FAST: 4 Principles Every Business Needs to Drive Success and Achieve Results, was a finalist for Management Book of the year 2017. He is a regular contributor for Inc. Magazine, Entrepreneur, Forbes, Fortune and Business Insider and an international keynote speaker, recognised by Inc. Magazine as a top 100 leadership expert and speaker. Gordon works with organisations to transform culture, drive results-based leadership and rapidly accelerate organisational growth and performance.

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