Cutting costs and running a tighter and more efficient ship is one of the ongoing concerns for all CEO’s. Often the tendency is to look for ways to drive revenues and of course this means more spending on driving sales. It is an advertising and marketing spend, more salespeople and bigger commissions. It all adds up but of course, it does have the potential of driving numbers. But cutting costs is also an option to make a business leaner and more efficient. And while you don’t necessarily want to retrench the human resources department is a place that should be prevailed upon to help find some cunning ways to lower costs. Here are a few ideas they should maybe look to consider.
Is there scope to outsource?
Many companies loathe outsourcing as they think having lots of staff makes them seem big and powerful. In many instances this is pure vanity and what it is really creating is expensive, under-utilized staff who are bored and who need to be managed. It is not a good situation. Rather ask your HR people to do some cost-benefit analysis on areas that are not deemed core to your business. You may well find that it is much cheaper to engage a managed IT solutions Melbourne based company than it is to have your own team in-house. This is particularly the case if IT is not your core business. There are plenty of other areas where outsourcing could work. We are talking cleaning and domestic, financing and invoicing, legal and security. It is not to say that all these departments need to go, but it may well be the case once you have done some investigation.
Staff accumulate leave each month and they often need to be paid out when it is time for them to leave. Imagine a world in which staff was granted unlimited leave. They can take off whenever they want, with the proviso of course that they must be hitting the targets and meeting KPIs. This is something that is becoming increasingly popular with tech companies and it is working well. What it means is that you never need to pay out untaken leave. People with this option tend to take less leave as they strive to meet targets and achieve. It is a real win.
Every balance sheet will have a category for staff benefits and welfare. It covers all manner of things from the year-end party to farewell gifts, business training and incidentals. It is an area where spending can be quite haphazard and often uncontrolled. Look to ensure that there are checks and balances in place here and that spending is not based on popularity but rather on a pre-agreed framework. In other words, the farewell gift for somebody who has been there ten years should be more expensive and the send-off bigger than somebody who has been there for a year. It sounds logical but the tendency is often to spend based on popularity or available funds rather than on service – and it all leads to costs slowly but surely spiralling out of control.