One of the main areas where you can reduce expenses and improve revenue is staff management. Of course, you’ll want to make any changes with caution and care.
No business owner wants to lay off staff, but it is possible to efficiencies and cut staff costs without layoffs.
Here’s a quick real-life example from an e-commerce company:
Warehouse employees were working at $16 and hour when local competitors raised their rates from $15 to $18 an hour.
They tried hiring more employees to keep up with demand, but came up short, and now they were starting to lose employees.
One of the regional warehouses was in very bad shape, so they raised wages up to $20. However, the other 2 warehouses took a different approach.
They invited employees to a discussion and shared the challenges the company was facing. They had a need for high-quality shipments and the employees needed increased compensation to deal with the higher cost of living expenses due to inflation.
The company committed to meet wages at the market rate and managers and employees committed to working together to meet key performance metrics in order to provide quality shipments that met particular delivery times. They came together to brainstorm ideas and devise some plans.
The result was they retained employees, did not have to spend money to deal with hiring new employees, and the upturn in performance overall increased profits to assist with the increased wages.
Now that you’re inspired, here are some suggestions to help you slim down staff costs without sacrificing productivity or profits:
- Close down or downsize your offices and have your team work remotely. Keep a small storefront or main office to keep an address and to allow for any in-person communications with clients, customers, or staff. You may have to train some staff for remote work and adjust their equipment or workspaces, but if the cost reduction is significant, the changes will be worth it in the long run.
- Consider hiring freelancers or independent contractors instead of filling full-time positions. For a short period of time, use these part-time or contract-based professionals until you can fill the positions you need more permanently. Most estimates show that using an independent contractor instead of a full-time employee can save you 30%.
- In some areas, you may be able to automate functions instead of using a person. Robotics, AI, machinery, or other technologies can come in handy when you are looking for significant savings.
- Hold off on insurance premium increases and reduce the premium costs for employees. Look into any improvements that can be made with your insurance plans.
- Another way of reducing the costs of employee benefits besides lowering insurance premiums or renegotiating plans is to offer different types of benefits that may attract talent in your area. For example, flexible work schedules, creative/laid-back work environments, the option of working remotely, and offering payroll deduction programs so staff can buy their own savings bonds could make up for any of the other benefits you aren’t able to provide.
- The more efficient your employees are, the more work gets done and revenue can increase. You could also retain more customers by improving product delivery times or fast customer service. The people on your team are your greatest asset, so if you encourage them and create a positive workspace, you’ll motivate them to do well. Offer trainings to improve production and incentives for production numbers or quality work and you’ll likely reap great returns from your staff.
- Offset any reductions you need to make by investing in other employee perks, like rewards of gift cards for groceries and gas.
- Hold a round-table meeting with your employees to discuss their needs and the company’s needs to conclude how both sides can improve and finalize any important decisions — like the e-commerce company mentioned above! They were able to come to an agreement that not only paid their staff a fair wage to keep them satisfied, but implemented performance metrics that would ensure productivity needs were met, thereby boosting profits. That’s the definition of win-win.
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