Note: Join our B2B Community here if you like this post.
With increasing living costs, businesses are looking for ways to lower operating costs and improve profitability. Many small-to-medium businesses find they can do so by cutting the costs of hiring employees. However, with the rise in minimum wages and staff benefits like holidays and pensions expected to be even more costly, this might not be as simple as it sounds. To cut your company’s hiring costs without hurting your service standards or quality, you must identify areas where you can save without cutting your performance.
One of the ways you can reduce staff costs is by hiring only where it is needed. First comes a company’s strategy: the vision, mission, values, objectives, and how you are going to deliver value for customers. It drives the way an organisation works and what skills are needed.
Skills are either brought in through hiring permanent staff or flexible hiring of outside professionals, who may bring an entrepreneurial mindset and cross-pollination of prior experiences. This approach is viable when designing parts of an organisation from the ground up or perhaps when a temporary need arises for extra skills.
If an organisation is already in place, and there is an emerging need for changes and alignment to the strategy, then this approach is all about change. CEOs and founders are often surprised at how adaptive most of their people are and how willing they are to change, even though, at times, difficult choices must be made. Investing in the right people and giving them opportunities to grow through cross-functional projects or training is worth making. It provides flexibility in restructuring and re-aligning a company with new strategies or uncertain environments.
In contrast, employing people on a national living wage, saving costs in the short-term, produces a demotivated, inflexible, commodity-based workforce: People act as they are treated. A large part of cutting your costs for hiring employees is cutting how many employees you employ. If you can optimise your processes, you can employ less staff (and therefore reduce your overall wage bill). However, it is essential to note that cutting back on staff will impact the performance of your company and the service it provides. For that reason, it is crucial to identify areas in which savings can be made and to execute those savings without compromising service standards or the quality of your work.
Outsourcing as much work and processes as possible will reduce your costs for hiring employees, allowing you to focus on core business activities. If you hire someone to manage HR functions, you can count on them to follow the laws regarding hiring. Similarly, outsourcing your payroll will free up your time to focus on making your company more profitable. You may even be able to automate other business areas, like marketing and sales, to save time on core business tasks.
It will allow you to do more with less, saving on hiring personnel costs. Remote work, job-sharing, and flexible working hours are becoming increasingly popular in the UK for good reasons. They allow you to employ employees with a broader variety of skills and experiences than you could hire at the same salary. On one hand, they are more appealing to younger workers, who are increasingly likely to opt for flexible working arrangements.
On the other, they also allow you to hire more experienced employees. For instance, you might be able to hire a skilled web developer through job-sharing. You might be able to hire on a per-position basis with tailored hours. For instance, if you are hiring a virtual assistant or someone who handles your marketing, you could allow them to work on a 9-5 schedule or at their convenience, like evenings, weekends, or from home.
It would allow you to hire employees with a broader variety of skills and experiences than you might be able to hire at the same salary. It is also good practice to offer your existing employees flex time to avoid friction and miscommunication.
With that in mind, it is essential to point out that hiring a team of effective, productive employees is the best way to lower your hiring costs. Thinking of people as an input cost (labour) can be misguided, and the cost per se should be just the final consideration. I always tell my clients to view their people not just as costs- they are not raw materials- but as individuals who, in a knowledge-based society, are becoming tangible assets and human capital for a business.
Please read the full article on Global Banking & Finance Review
Join our B2B Community here if you liked this post.