It’s true that a business is largely all about its people in terms of their skills and abilities. It’s also true that staffing and general personnel takes up a significant chunk of the budget – not just in salaries but in the costs of employing, training, equipping and accommodating them.
Managing staff overheads is an effective way of improving the bottom line and very important in the overall ongoing financial management of a business. Here are some ways to manage costs:
Outsourcing and hiring contractors
When considering a new appointment or how to handle an upsurge in business, is it necessary to hire a full-time salaried employee?
It’s becoming more common to outsource work to external contractors such as freelancers. It’s easily done with the right financial tech to keep track of activities, and using 1099 forms to report payments made to them to the IRS (Internal Revenue Service) to keep everything above board.
Outsourcing means you can react to varying workloads without necessarily committing to the overheads of recruiting permanent staff.
Remote workers
There’s a definite trend for certain employees in some workplaces to work remotely rather than at their employer’s workplace, and remote working is definitely on the rise.
This means more staff can be hired without necessarily having to provide office space and the general infrastructure for them. Modern tech makes it easy in many cases for staff to work remotely yet still able to communicate easily with the organization via facilities such as Skype and high-speed connectivity.
Along with being a way to avoid extra costs when hiring new people, it can also save costs with existing staff if some are given the chance to work remotely.
Training and education
While it’s not advisable to skimp on training staff properly, the ways that staff are trained might be reviewed and replaced with cheaper yet still effective methods.
Instead of expensive residential training courses, maybe they can be replaced with online or in-house training? Advances in tech now make it easier for staff to receive training through methods such as remote conferencing, Skype and via modules delivered digitally.
Cutting on the probable cost of ‘classroom-style’ training courses and putting staff up in hotels, yet still providing effective training, could yield significant savings in staff overheads.
Redundancies and dismissals
It’s a grim truth of business and commerce that redundancies due to lack of business or scaling down operations are sometimes required, and dismissing an employee due to their unsuitability for the job is also part and parcel of running a business.
Redundancies are, of course, the last-ditch option when it comes to reducing overheads, but maybe these can be ameliorated by redeploying staff as remote workers or offering some the chance to work as contractors rather than full-time members of staff.
Dismissals aren’t usually done purely to save on costs – it’s often a case of someone not being right for their job or having committed a sackable offense. Where a dismissal might save on staff overheads is if you decide their job can be outsourced, or absorbed elsewhere.
Overhead value analysis
A danger of cutting overheads – not just in staffing but elsewhere – is when it compromises the calibre of the products or services the company offers. Cutting overheads is all very well, but if customers stop buying a product because the quality has dropped there’s a danger that the savings won’t match the drop in revenue.
In overhead value analysis, alternative lower cost ways of delivering the services or making and providing the products are examined whilst not compromising the quality of what the company provides.
Tackling overheads this way is the more considered and likely more successful way of reducing outgoings, while keeping the bottom line healthy through continuing to offer the same value in products or services.
