No one ever wants to make people redundant, yet because your employees are probably the biggest part of your budget it’s especially important to keep a tight grip on how much you’re spending in this area. This means that cutting staffing costs will probably be a major part of your plan to keep control over your budget.
Yet as well as being your biggest cost, your employees are also your biggest asset. This means that redundancies should be your last option when cutting staffing costs, rather than your first.
But there are ways you can look to cut staffing costs without making people redundant. What works best will depend on your business – but all are worth considering.
Hiring freeze
In every company, there is a certain amount of “churn” – employees leaving of their own volition, often to move to other companies. If you implement a freeze on new hires, this churn will inevitably mean that your head count is reduced, without the expense or issues surrounding redundancies.
Unsurprisingly, this means that a hiring freeze is often the first thing which managers look to when wanting to reduce staffing costs. However, it does have its drawbacks. First of all, the people who are likely to leave are often exactly the staff you want to retain – experienced and ambitious employees. Secondly, you can never control who wants to leave, which may mean that teams in your organisation lose vital members at a difficult time, something which will reduce morale and may impact on productivity.
This means that while you will probably wish to keep a very close eye on new hires, a formal hiring freeze may be counterproductive. Instead, insist on very strong justification for any new or replacement hires.
Cut the training budget
Training is often seen as a soft target when you’re looking at the staff budget. Although every employer knows the value of training, this value often doesn’t appear until the long term. This makes it difficult to justify some training when you’re looking for a short-term return on investment.
In larger organisations, this problem is often compounded by managers looking at the training budgets for their teams as a “use it or lose it” line item. That is, they believe that if they don’t spend the training budget, next year it will be cut – and often they have good reasons to believe this! This sometimes leads to a desperate rush to spend the training budget before the end of the financial year.
The answer to this is to encourage a skills-focused approach to training that plans ahead. Make sure that training needs are clearly set out when your employees have their yearly reviews, and budget accordingly rather than having a set budget which a team looks to spend.
Secondly, encourage more in-house training. Your employees have a wealth of experience and if at all possible should share this regularly. Learning to train others can also be a valuable step in someone’s career.
Reducing travel
In a survey for CIO Insight, 57% of companies were looking at cutting their travel expenses as a way of cutting staffing costs – and with good reason. All too often, travel is seen more as a perk than as a business tool, and cutting out unnecessary journeys can be a great way to reduce expenditure.
However, if you’re going to do this, you need to make sure that your employees have the right tools to make it work. Making phone conferencing available to all your staff is a step in the right direction, and Web conferencing can be an excellent tool for giving presentations and sharing documents at the same time as meeting.
Remember, though, that sometimes a face-to-face meeting is the best option, so set some ground rules for employees about when travelling to meet a customer or business partner is the best thing to do.
Hotdesking and home working
Offices cost money to run, and that expenditure increases the more people you have working for you. Put simply, the less physical desks you have, the less you’ll spend on office space.
One way to reduce this cost is to look at shared desk schemes or “hotdesking”, where employees don’t have a fixed desk but instead grab a shared space when they come into the office. Hotdesking goes hand in hand with home working, and it allows your employees more flexibility about where they work.
You do, though, have to ensure they have the right IT set up. Laptops are an essential tool, and you’ll need to ensure that they are aware of how to work with mobile equipment safely. As a hotdesk means they have little or no physical file storage space, so check that documents can all be stored and accessed electronically.
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