In a tough operating environment, there are several ways a business can cut costs, however, it is surprising how first thoughts shift to reducing headcount through redundancy, which in itself can be incredibly costly.
Before considering any cuts directly affecting your workforce, you should consider how budgets can be cut and costs saved in other business areas.
It will go a long way with your workforce if individuals see you have taken serious steps to reduce costs elsewhere before you set your sights on their livelihoods.
Taking this route will likely mean you need to forget about finding a single idea that would produce the reduction in costs you need, thereby solving your problem in one go. Instead, you should plan to reach your goal with a combination of actions.
“I found the training really good and informative and now feel more comfortable and confident to complete appraisals.” Read the full review
More reasons to avoid redundancies
The degree of disruption caused by redundancies will usually be proportional to the degree of cutting you do. You must tailor reductions to achieve your savings goal.
Not surprisingly, one of the best ways of identifying where cuts can be made is to ask those who actually carry out the work on a day-to-day basis. Involving your workforce in coming up with and implementing effective cost-saving measures will demonstrate your commitment to teams and individuals and help cement relationships moving forward should you need to take further action. Great ideas can be generated, and there is a higher likelihood of buy-in and successful outcomes when the teams are involved from the outset.
There are a number of ways you can ask and encourage your workforce to come up with ideas. Again, a combination of methods will likely provide the best results. Consider using surveys, suggestion boxes, team meetings and focus groups. Always make sure you show thanks and recognition and involve individuals in implementing ideas to ensure they are successful. Remember to celebrate successes and inform the workforce of progress toward the goal.
Still unsure? Keep reading…
In the early 1900s, a factory worker at Swan Vesta went to senior management and told them he had an idea that could save the business millions of pounds in production costs.
He was ignored, with management unbelieving that a factory worker could have ideas of such value. After months of pushing and persuasion, however, the worker managed to get just a few minutes in front of the board, a sceptical audience, ready to laugh at his ‘million dollar’ idea.
The idea? To put the sandpaper strike on only one side of the matchbox rather than both. Revolutionary!
As any Swan matchbox will now prove, the idea worked, and the business saved millions.
Sometimes the best ideas are strikingly simple!
More ways to avoid redundancies
Here are some additional ideas to consider when you are looking to reduce costs within your business:
- Lay offs and short-time working
- Pay cuts
- Restricting/banning overtime
- Reduce pension contributions if the Company is paying above the statutory minimum
- Reduced bonuses
- Redeployment by temporarily moving employees to another area of the business
- Job shares where volunteers are sought to split a full-time job between them
Before implementing any of these actions, three important considerations are:
- The contractual and statutory requirements associated with any cost-reducing methods as mentioned above
- The financial impact on the workforce during the current cost of living crisis
- Relationships between the business and teams and individuals, both in the short and longer term
To ensure you don’t breach contracts of employment and can maintain an engaged and productive workforce it is essential to seek professional HR advice and support.
Whether you need advice on setting up forums for employees to put forward ideas or how to vary contracts of employment whilst maintaining workforce engagement, MAD-HR can help, so contact us today.