It's important to note that UK rules around salary sacrifice schemes and NICs are changing, so you won't quite see the same cost savings as you once did. There might be some creative ways of dealing with your equipment that reduces your outlay. It's also best not to set an arbitrary cut-off - particularly if it's the start of the next financial year (other companies will be doing the same, leading to a more competitive labour market). Whether looking at the cost of a cleaning service, or managing staff productivity, finding ways to save labor costs is a constant for facilities managers. NOW READ:Â A little goes a long way: Why Atlassian is encouraging startups to pledge 1% of their equity to charity, No 2 cant happen whilst the unions run the FWC, afterall they are the ones that said an employee can piss off early so they can get to their pilates classes *JFC* when will that insane madness end. Use proven cost-saving libraries to select the most promising and realistic ways to cut HR costs immediately. Adjust your overtime policy (and its enforcements) as needed. “You might look at creating ways of dealing with your equipment that reduces your outlay and create cash flow. 1. At a time when the nation s economy is softening, and perhaps worse, many organizations are considering layoffs as a way to cut costs. Coupled with the horrendous impact of the coronavirus pandemic, a lot of companies might find it challenging to pay their employees, and they might have to look for ways of reducing labor cost without reducing headcounts. It's no wonder that so many struggling companies show their staff the door when a financial crisis is imminent - and even healthy companies might be concerned if their labour costs rise above a certain threshold. “You can cut your marketing budget by being smarter about your marketing,” he says. It also ensures brain power remains in the organisation and it helps maintain employee morale. Business should look at three things to cut costs: staffing, rent and capital equipment. However, if you look at the many longer-term and indirect costs of redundancies, you'll soon find that the numbers aren't quite so appealing. Many companies did this when the global financial crisis hit in 2008. When times get tough, staffing costs are one of the first areas to fall under the spotlight. “The question you have to ask as a business owner is; are you making a real economy or are you making a false economy?” he says. Beforepay, Afterpay and everything in between: Do Australiaâs BNPL players have consumersâ best interests at heart? You might not include perks such as free meals or office stationery under your labour budget, but these costs are undoubtedly directly related to the number of employees you have on payroll. Some forecasts say that the official unemployment figures could rise to 6%. Of course, investing resources in training only works if you have the luxury to do so in the short term. One way is to look at ways to slice and dice equipment costs. Reduce Hours. If you're under pressure to get back in black quickly, your options are limited. Choose perks that are relevant to staff needs and wants, rules around salary sacrifice schemes and NICs are changing, Is a retail recovery on the way? Run a full benefits report (1-2x/yr) to get the true cost of your staff. Vendor reliability and maintaining quality are also issues. 8 Effective Tips To Reduce Restaurant Labor Costs Reduced revenues and stiff margins may lead you to desperate measures such as slashing down monetary incentives and even getting rid of people. Again, be honest with employees about why you're cutting back. “One of the most critical things they can be looking at is roster profitability. 1. ; Benefits — a shift to a more permanent level of flexibility in labor costs. Melbourne, 3000 Australia. Fax machines can be replaced by scanning equipment, accounts receivables can be put on e-payment systems and recruiting can become more targeted, perhaps using social media and other networks, so that businesses are not confronted with hundreds of job applications when they place an ad. Victorians to get $200 vouchers to spend in regional pubs, hotels and wineries. Reduce the costs of health insurance with higher deductibles and employees paying a higher share of the premium costs. If you have been doing business in any sector of the economy, then you may already understand how expensive it is for an employer to gain access to quality labor. Kevin Dwyer, who runs the consultancy Change Factory, says that knowing your goals over the next two to three years means you can work out where good and bad costs are. Ways to Cut Costs If your organization is in jeopardy of having to lay off some of your employees, consider these cost-saving techniques, much like Brandeis University: Extend unpaid holiday or vacation time pay for employees. Cross-training involves training employees in multiple skillsets so that they can fill several roles within the business. Maybe they have childcare commitments, or they'd like to dedicate more time to their side-project. He says he does one big test with clients. Copyright Â© 2020 Private Media Pty Ltd. Publishers of SmartCompany. It’s better for morale and the long-term outlook of the company to keep people on hand. However, there are ways to streamline the process which aids in reducing labor costs in manufacturing. “If I can get that up to 70 to 80%, I would get more customers and sales working more efficiently and I will make more money.”. SmartCompany is the leading online publication in Australia for free news, information and resources catering to Australia's entrepreneurs, small and medium business owners and business managers. The living wage rise may spell problems for some companies in the hospitality and retail sectors, but redundancy isn't the only answer to spiralling labour costs. And they’re likely to see a reduction in hours as a much better alternative than … Your recruitment freeze should, therefore, contain some degree of flexibility. Firms like KPMG have been offering staff part-time options as a way to cut costs. Cutting labor costs by reducing overtime for non-exempt employees is a good strategy. Sure, this approach might not work so well in companies where the vast majority of staff are on part-time hourly contracts already, but if your employees work to standard office hours, you should see some success with this measure. Downes advises to think it through. RotaCloud blog editor and occasional web dev. “Test the market for new suppliers to see if they can get better terms of whatever contracts they have in place. Dwyer says one of the big mistakes many companies make in hard times is cutting the marketing budget. But, for the startup and tech community, there is plenty to celebrate. You'll need to tick the boxes we mentioned above, or your staff will move on. Clock-outs even fifteen minutes late soon add up if 50 employees a day do this for half of their six shifts a week. Dwyer says, in that case, the companies should identify good and bad costs in marketing. If you don't already, start using past sales data to forecast your labour requirements for each day. Track Labor Cost Daily and Watch Your Weekly Average. Ten ways to cut costs — without cutting staff. In the retail and hospitality sectors, overtime can significantly inflate your labour costs. Get COVID-19 news you can use delivered to your inbox. These perks could be anything from flexitime or compressed hours to free lunch on a Friday or free gym memberships. Here are six strategies for reducing the cost and maximizing the productivity of your labor force. The traditional approach of reducing your headcount at best fails to save you money; at worst, compromises the long-term health of your business by undermining capabilities and morale. Potentially, it could create massive savings if everyone did that. This option isn't going to be well-received, but it can be effective in the right circumstances. Labour costs are one of the biggest business costs, usually accounting for something between 10-35% of your total revenue. But, your expenses continue to mount. Recruitment freezes work best for larger companies with dozens or hundreds of employees. By combining paid vacation and a reduced amount of sick leave, you can reduce your costs associated with absenteeism. Decreasing Labor Costs Without Layoffs. Business being an economic activity runs for maximizing profit. As part of this strategy, the company can introduce job sharing where business reduces the number of jobs in an area while retaining full-time coverage. “It’s about looking at the cost per sale from a labour cost perspective. Costs are on the rise and the economy is dragging. Yet organizations continue to cut. A majority responded with the same answer: controlling labor costs. Adjust future rotas accordingly. Striking staff off your payroll isn't your only option for reducing labour costs. “Maybe you don’t do the TV ads which are about brand awareness but you do all the store-based stuff because you know that drives purchase.”. If you've set a precedent of offering a significant pay rise each and every year, it's difficult to break the habit. That’s a function of having the right staff on at the right hours so there is no wasting valuable resources at quiet times of the day,” Downes says. 2. Your employees may be burnt out, want some time off for travelling, or need to work on other aspects of their life such as moving house or training a new puppy! BNPL providers such as Afterpay and Beforepay continue to gain prominence, but do these operators have consumers' interests at heart? “Let’s face it, you might have an employee with you for five or 15 years and it may be that they are no longer challenged.
2020 ways to reduce labor costs without cutting headcount