Absolutely no business owner wants to look into the eyes of an employee when they are about to lay them off. If you’ve been through this, you know and with the current economic climate, you are certainly not alone. In addition to inventory and insurance, payroll is one of the highest operating expenses of a business. Before you lay people off, make sure you are trying alternate ways to save money.
Ask for voluntary hour reductions. There may be an employee or two who would actually like to reduce their hours, but don’t because they need benefits. Consider offering reduced hours with full benefits for staff you feel comfortable rewarding with benefits at less than full-time status.
Shop around for health care benefits. It may be time to review your policy. Get quotes from independent agents and offer a cafeteria plan where employees only sign up for what they want or need. No use supplementing even a portion of insurance that someone doesn’t want.
If you currently offer an automatic 401(k) match, consider switching that to be based on company profits. This way, in lean times, you are able to save but in more robust times you can be more generous. It is also a productivity incentive.
Get an energy audit if you own your property or ask the owner to have one performed if you lease but pay utilities. See if there are small changes you can make that will reduce your utility bill which, for some businesses, can be extremely high. Set policies in place for turning off lights, reduce temperatures on water heaters, switch to energy efficient compact flourescent light bulbs, and turn computers off at night. These are small changes we should all make regardless of needing to reduce costs!
For more information about ways to reduce payroll costs, check out this new article.
by Steven Schlagel