Cutting Costs without Cutting Labor
by Nathaniel Davis
Eliminating jobs does not result in immediate cost-savings. You have to consider severance packages that have to be financed as well as unemployment benefits to satisfy. The morale of the employees left behind always suffers.
There are strategies that can save money immediately, keep unemployment insurance rates down, and even maintain or improve employee morale while saving jobs. You should always consider alternatives before implementing involuntary reduction of staff. Below I have listed a few.
Temporary Staffing: Temporary staffing is not a part of the human resource budget that is reserved for regular employees. You can save many dollars here due to your organization not having to pay unemployment benefits if this staff is reduced.
Part-time Employees: Sometimes you will have part-time employees scheduled to work 25 hours per week but are working upwards of 40 hours per week. Take a look at actual hours worked versus just full time equivalents. Look at the actual dollars and hours versus just focusing on head counts.
Job-Sharing: Allowing two people to work part-time hours for one full-time position allows for seamless coverage of the position. The client and the organization work with the team as if they were one person. 2 people getting the job done and the organization benefits by enjoying 2 heads instead of one.
Telecommuting Increase: This doesn’t directly affect labor costs, but it can reduce costs in the amount of office space utilized as well as office equipment. You can take advantage of allowing multiple employees to use one office on specific days when they are not working from home.
Organizations need to be flexible and look toward long-term cost cutting measures. Lowering employee morale and gutting the talent pool can negatively alter the organization over the course of years. Not focusing on just cutting labor can find the organization benefitting more in not only the short-term but looking forward into the future.