How to Save Money on Personnel Costs

May 4, 2022

Running a business means having a thousand tiny ways through which you can lose money. One of these is the cost associated with the hiring, firing, and the maintenance of employees. Here are some small and simple ways to cut unnecessary corners with your personnel.

Increase Retention

One simple rule of business is that more shuffling of the company organization means more money slipping through the cracks in the process. You end up spending money on extra managerial time required to interview applicants and required to train new employees – not to mention the money lost as the trainee travels along the learning curve, performing tasks more slowly and less efficiently than a veteran. Minimize these costs by focusing on employee retention. While there are many occasions where an employee decides to leave for personal reasons beyond anyone’s control, the bottom line is that workers value a healthy, happy work environment very highly. Pay rates and benefits can be big motivators, but creating a safe, human company atmosphere will be the biggest. Why? Because that is harder to find than any benefit.

Use Contractor Work

Contractors and employees have different pros and cons. Contractors will be further outside of your control – since they set their own hours, may have other clients besides you, and so on. But that also means that you are exempt from many responsibilities and obligations that, as an employer, are legally mandated to provide but that are sometimes costly. Benefits, for example, are a completely different story with contractors. You won’t have to train them or do taxes for them when it comes to their payments. It also presents a more flexible situation in the general sense; hiring contractors gives your business the expertise it needs without needing to hire permanently. So, you likely won’t run into the problem of having more employees than you need.

Understand Shifting Employee Demand

This one can be more difficult because it is a little more nebulous and so vastly different for distinct markets. But if you can understand the demand for your business, you can understand when and how to hire and let go. Seasonal changes in demand are a big factor – but so are fads and trends. Sit down with a market analyst or accountant if necessary to discuss when and how demand has changed over the course of your business. Plan for hiring according to customer rates. If you need significantly less employees later in the year, see if you can work out contractual employee agreements for a certain amount of time, with the option to be renewed if the employee in question makes the cut. Don’t surprise people with layoffs; be honest about your intentions from the beginning. By planning ahead, you will avoid being taken by surprise by a sudden influx or outflux of customer interest.

Simplify, Simplify, Simplify

There’s a difference between cutting corners in a way that increases stress and employee workload and streamlining your process so that it becomes easier for hires to do more than before. A big key to doing this properly is technology – which is currently revolutionizing workplaces across the business sector. Research how technology can improve your current system (with payment methods, advertising, calculations, and more). Review an average employee workload and try to figure out what, if anything, is superfluous or overcomplicated.

As exhaustingly complicated as personnel matters can sometimes be in the corporate world, the effort you make to shore up loose ends will be very much worth it. Personnel is just one business category of many that can leak money if left unattended. Work to make your business a flourishing, efficient environment and you will see results!

Check out this article for all you need to know about staff augmentation!

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