With the economy in a slump. many small businesses are struggling financially. There are only two ways to improve your bottom line. You can increase revenue or reduce expenses. With customers not spending like they were, increasing revenue may be impossible. One of the biggest expenses is payroll, but can you cut this cost without reducing staff?
When a business owner or manager begins to look at cutting costs, the first thing that gets pulled is the income or profit and loss statement. In a typical product-based business, the biggest numbers are usually product, insurance, and payroll. Product is usually out, unless you have serious inventory issues. You have to have something to sell, or you're not in business at all. You know you can't ditch your insurance expense. That leaves payroll and all the related costs that go along with having employees. You don't want to lose anyone - the economy will pick up eventually. How do you cut payroll costs without resorting to layoffs?
Some companies reduce the amount they pay for benefits by shopping for a less expensive policy. Company parties could be held on-site instead of in the local hotel's banquet room. You may feel a need to temporarily reduce bonuses and perks - just let them know that it's only temporary.
Always be on the alert regarding overtime. Sometimes rescheduling individuals and offering flexible schedules can reduce overtime. If you pay for lunch hours, consider eliminating this at least in the short-term. Depending on the number of employees, these small cuts can make a big difference without having to resort to layoffs.
Research has shown that for every 100 hours of paid productive time, you are paying for at least 2.3 hours of non-productive time. This is called presenteeism or lost time when employees are present. Before you start laying off individuals, see if you can improve productivity to maximize your payroll dollars.
Productivity is reduced by employees who come to work sick, manage personal problems by phone, take smoke or unnecessary bathroom breaks or socialize with coworkers. Often employees are reluctant to call off when they are sick or to use counseling services if they are experience personal problems or job stress.
Most companies use disciplinary action to control absenteeism and productivity issues. There can be more effective ways to deal with this like offering "paid time off" vs. sick and vacation time so employees can use their time as they see fit without fear of being penalized. Also offering telecommuting or flexible scheduling can allow employees to be more productive and improves loyalty. Also offer wellness programs and employee assistance to help your team cope with health, financial or legal issues.
You will build loyalty and improve relationships with your employees if you try other actions before resorting to layoffs. Small reductions in other areas can be enough to save positions. Be sure you consider some of these tactics first before you take that last, though sometimes necessary, step.
When a business owner or manager begins to look at cutting costs, the first thing that gets pulled is the income or profit and loss statement. In a typical product-based business, the biggest numbers are usually product, insurance, and payroll. Product is usually out, unless you have serious inventory issues. You have to have something to sell, or you're not in business at all. You know you can't ditch your insurance expense. That leaves payroll and all the related costs that go along with having employees. You don't want to lose anyone - the economy will pick up eventually. How do you cut payroll costs without resorting to layoffs?
Some companies reduce the amount they pay for benefits by shopping for a less expensive policy. Company parties could be held on-site instead of in the local hotel's banquet room. You may feel a need to temporarily reduce bonuses and perks - just let them know that it's only temporary.
Always be on the alert regarding overtime. Sometimes rescheduling individuals and offering flexible schedules can reduce overtime. If you pay for lunch hours, consider eliminating this at least in the short-term. Depending on the number of employees, these small cuts can make a big difference without having to resort to layoffs.
Research has shown that for every 100 hours of paid productive time, you are paying for at least 2.3 hours of non-productive time. This is called presenteeism or lost time when employees are present. Before you start laying off individuals, see if you can improve productivity to maximize your payroll dollars.
Productivity is reduced by employees who come to work sick, manage personal problems by phone, take smoke or unnecessary bathroom breaks or socialize with coworkers. Often employees are reluctant to call off when they are sick or to use counseling services if they are experience personal problems or job stress.
Most companies use disciplinary action to control absenteeism and productivity issues. There can be more effective ways to deal with this like offering "paid time off" vs. sick and vacation time so employees can use their time as they see fit without fear of being penalized. Also offering telecommuting or flexible scheduling can allow employees to be more productive and improves loyalty. Also offer wellness programs and employee assistance to help your team cope with health, financial or legal issues.
You will build loyalty and improve relationships with your employees if you try other actions before resorting to layoffs. Small reductions in other areas can be enough to save positions. Be sure you consider some of these tactics first before you take that last, though sometimes necessary, step.
About the Author:
With 30 years of business coaching experience, Steven Schlagel provides training and coaching for startups, entrepreneurs and small business owners. Check his site for more articles to increase your success!
Posts
No comments:
Post a Comment