When it comes to costs for any company, the largest one remains its employees.
However, don’t get me wrong. This does not mean that your employees are dispensable – well some are but at the end of it all, your employees are your greatest investment.
When you treat them right, they will treat you the same. They will not only deliver on expectations but also remain loyal.
But how do you balance between motivating your employees and cutting down unnecessary costs?
Staff expectations versus staff costs are two things that must be balanced carefully. Here is how you ensure that you reduce staff costs without implicating your entire business.
1. Reduce your payroll bills
Employers are expected to review employee salaries on an ongoing basis.
However, it is important to determine if your company is really moving forward or you are setting yourself to fail.
While paying a competitive salary is one of the best ways you can retain your best staff, there is a need to constantly review and compare your payroll expenses to the gross revenue you are making.
Never should your payroll exceed your gross revenue.
2. Consider investing in cross trainings
While working towards reducing staff turn-over die to issues like poor pay or lack or career growth opportunities, there is a need for cross training.
In some positions, having an employee who has more than one skill is a good way of cutting costs. It will help in making changes easily such as staff restructuring without necessarily affecting your service delivery.
For instance, y0u are better off if you have an IT person who is also well versed in digital marketing than an IT person and a digital marketer.
3. Consider converting some of the wages into commissions or benefits
There are two ways you can do this. One you can convert part of what you pay your employees into monthly commissions once they hit certain set targets.
This can be especially effective in new employee as you continue reviewing your pay structure.
This not only reduces costs but keeps your employees motivated therefore giving you their best.
The second way you can do it is by converting the employee benefits into cost-sharing plans.
For example, reduce the cost of medical cover with deductibles being covered by you and your employees.
4. Consider outsourcing some services
Technology has made operations so easy in a way that some services can easily be automated. How can this translate into reducing staff costs?
Depending on the nature of your business, you can outsource some of the services such as IT, HR, accounting and more to ensure that you remain with a lean team that you can easily manage.
Look at it this way; it’s more expensive to retain some of these professionals on a full time basis while you can outsource for half their monthly salary from a reputable firm.
5. Lower your staff turn-over as much as you can
Did you know that when an employee quits it can end up costing you 20% to over 200% of their salary?
High employee turnover is a cost that will put a dent to your staff cost because it ends up increasing your operational costs when you have to hire someone totally new, a process that ends up costing you so much.
The cost of recruiting and training of new employees should always be kept on the down low.
Are your employees meeting job expectations? Do you find yourself constantly reminding your employees what to do?
Are you too involved in operations and micro managing employees? Is your revenue constant or declining?