The way to reduce staff costs so that no employees are hurt

When it comes to optimizing staff costs, most people think of pay reductions or even worse, layoffs. However, the experience has shown the destructiveness of such actions for business. Optimizing staff costs through pressure damages a company’s credibility.  This is the reason for employee turnover, since the person who just shows up for an interview will not have any sense of assurance. This kind of optimization of staff costs has a negative impact on the business performance.

Civilized and rational attitude towards people

Staff costs can be optimized through competent management decisions. Some of them are:

1. Reduction of business expenses. You may ignore workplace furnishings or extra cleaning, but it will save you up to 25% of your budget.
2. Revision of the staff structure. There is a great chance to find positions that are no longer relevant and no longer of any value. Such a procedure will bring savings of up to 40% of the budget.
3. Amendments to the remuneration system. It is much more efficient if a person is rewarded based on performance rather than based on a rate. You’ll save 30% of your budget this way.
4. Differentiated staff selection. This will take some time to meet with each employee, interview them and find out their strengths and weaknesses. These measures will make it possible to identify both professionals and those who are paper-pushers waiting for a paycheck with no benefit to the company. It is only fair to get rid of the latter. As a result, you will save 20 to 30%.

You are free to reduce additional staff costs such as corporate events, team building, Welcome Pack events hosted for newcomers. It is rational to give up free coffee and unlimited treats. You should not eliminate benefits package, insurance, incentives and other staff costs, but if you find it necessary, make sacrifice of them, having previously agreed on the issue with the staff.

Specific steps

If, however, reducing staff costs is a forced measure, we offer the following options:

1. Outsourcing. In such a case, the company, instead of adding additional employees to its staff, invites people from outside the company to do certain jobs. For example, cleaning can be outsourced to a cleaning services company, security – to a special-purpose agency, supply of products and materials – to an independent logistics firm. Thus you don’t have to pay a salary with the accompanying deductions.
2. Outstaffing. Many large enterprises have reduced their staff costs in this way. This is the case when employees are out of the staff, but continue to work within its structure, while being employed by another organization.
3. Remote work. If you have the opportunity to build communication with staff at any location, take advantage of it. This may be offered to employees whose work involves computers.

Remote work allows you to reduce the cost of maintaining a workplace, and save the lion’s share of rent. Social security benefits are also reduced.

Additional options

Staff costs optimization methods are not limited to those outlined in the previous paragraph. Positions overlapping (e.g. accountant and economist) can be effective.

Rescheduling is allowed as part of staff costs optimization. For example, if a five-day work week forces employees to work on Saturday, implement a six-day work week. This way you don’t have to make double time weekend pay.

If there are freelancers, arrange an hourly schedule for them. So you only pay for the time they actually work. Part-time or four-day week schedules can be introduced as part of cost optimization if necessary and agreed to by the staff.