As many companies know, labor is often the biggest cost of doing business. It can account for up to 70% of total company expenses. This is why businesses look for strategies to lower staffing costs. But before doing anything, keep in mind that your team is essential and indispensable to your business. Therefore, learning how to properly reduce staffing expenses without the need to change compensation or drastic adjustment can help keep your business afloat and drive it towards growth.
How to Lower Your Staffing Expenses
Here are 5 simple tips to help maximize your business funds by effectively curbing employee costs:
1. Reduce Employee Turnover
Employee turnover is when your existing staff leaves to take another opportunity elsewhere. When this happens, you need to hire new or more employees to take over the job. And that is what will make your staffing expenses higher.
The question here is, “How much does an employee really cost?”
Believe it or not, it is more than the salary of an employee. It includes the expenses from the beginning such as job advertising, talent pooling, interviewing, background checking, medical examinations, training sessions, and many more.
As you have seen, having a significant employee turnover rate also means having excess costs mostly because of the onboarding fees. Aside from that, it will also drain you of time and productivity. And that is definitely something you should look out for, especially that business is a world where time is equivalent to money.
These are basically why maintaining a happy and contented staff is the key to the effective cutting of staffing expenses. To help you prevent your business from having a high turnover rate, here are some points to consider:
- Ensure job security among your employees.
- Establish a great company culture with respect to everyone.
- Create a fun work environment while staying efficient and productive.
- Monitor the workload of your employees. Make sure it isn’t overflowing.
- Make them feel that you trust them and their abilities.
- Drive them towards growth by providing training and other activities.
- Do things that will make them feel that you care about them.
- Provide perks and benefits, especially for top talents who truly deserve it.
2. Allow Your Staff to Maximize Their Time on Important Business Activities
If your people are running on deadline for major projects, it will be helpful for them if you reschedule all business activities that can be moved to a later date. If you want them to be more efficient and productive, give them enough time to have the tasks done one at a time. It is important to take priority to more important business projects. Also, it’s always better to ask for the perfect time to deal with other activities.
One great example of this is a meeting, which can sometimes take a lot of their time. Ask yourself, “Are the meetings we’re having every now and then are all necessary?” Only you can answer that question. If not, allow them to focus on business-impacting activities by cutting the meetings short as much as possible while still getting the same or even better results. This will benefit both you and the employees as whatever they are doing are for your business. And if you can, you might as well want to make it an email message instead of a meeting to save time.
By doing this, you get to maximize their time well on tasks that can help your business grow.
3. Cross-Train Employees
You don’t always have to hire a person to do a specific job. Assess the role if it is something that will take a lot of your staff’s time. Some minor tasks can already be done by your existing employees, especially if you provide them with the proper training they need.
This is why cross-training your people can reduce the staffing expenses of your business. A workforce that is knowledgeable and trained to do a variety of tasks will enable you to make significant changes even with a limited staff without affecting your operations. It will benefit both you and them as they will acquire new skills and knowledge that can be their edge not only for career development, but also for personal gain.
It will be more effective if you ensure that they are interested in the topic of the training. You can create a survey for your employees about which skills they want to learn and align with what they have listed.
4. Review Your Current Processes
As businesses grow, it gives birth to independent departments with different roles in the company. However, in some cases, some tasks are being repeated by several teams. This is when you should eliminate redundancy between departments. It would be great to review your process and be clear about the tasks and roles that each team should specifically play in the company.
Aside from preventing confusion among your people about who to ask regarding a project, it will also make your business processes faster as the tasks no longer have to go around different departments. It effectively eliminates interdepartmental flow and communications.
In addition, once you have determined which teams are responsible for every task, you can give other unassigned tasks to the departments that can still handle additional projects instead of hiring new staff to take charge of them. It is beneficial to your business as reviewing your process allows you to see who has fewer responsibilities.
5. Automate and Outsource Some Business Processes
Technology and the way companies deal with business processes have enormously evolved in recent years. You can now automate many tasks for quicker turnaround time. You can now outsource many processes to third-party companies for hassle-free operations. Businesses turn to automation and outsourcing services as they are easier, can handle more duties, and most importantly, cost-efficient.
When you outsource some of your business processes to an outsourcing services company, you can save costs by up to 70%. It becomes possible as first of all, you don’t need to purchase equipment, tools, and other materials that your outsourced staff needs. Your outsourcing partner will provide it including the office space and other perks and benefits for your people. Also, outsourcing service providers use up-to-date tools to speed up and simplify work.
If you want to maximize cost savings, you might want to outsource BPO services in the Philippines where the labor cost is lower than other well-known outsourcing countries in the world. Plus, the many business advantages you can get from them.
There are instances when the quality of your services will be compromised. To prevent this from happening, make sure to choose the right service provider for you that can definitely give value-for-money.
Cutting the staffing expenses of your business isn’t like a piece of cake. Most of the time, it is more like squeezing a balloon in which one side gets stretched as you squeeze the other. To balance it, you might need to face difficult decision-making and effective strategy.
In addition to the points mentioned, if you want to be successful with minimizing your staffing expenses, it is important that you communicate with your employees. The actions above might confuse them if you don’t provide sufficient information. Tell them why changing some policies to save costs is necessary. Win their loyalty by letting them know that it is for their own good as well as for the company to continue thriving.
Reduce Your Staffing Expenses through Outsourcing
Start your journey towards a more cost-efficient staffing strategy through outsourcing. If you are looking for a reliable service provider in the Philippines, Booth & Partners offers Staff Leasing and Managed Services. For years, our tailored staffing solutions have been helping businesses of all sizes to save costs and deliver quality services to their clients. Explore more about what we offer by getting in touch with us.