8 Steps to Immediately Reduce
Workforce Cost
Executive Brief by Steven T. Hunt, Ph.D. & Bob Phillips
Current economic conditions are
forcing many companies to significantly reduce workforce operating
costs. While reducing workforce costs is often necessary to keep
companies financially solvent during difficult times, if done poorly
it is just as likely to exacerbate an already difficult situation. This
Executive Brief outlines 8 steps to quickly and effectively reduce
workforce costs, while minimizing the negative impact on your business.
Downsizing is never easy, but if
done effectively it will allow your company to survive a down economy.
Here are 8 steps that will help you make effective, efficient decisions
to immediately reduce workforce costs:
1. Cut spending first before headcount.
Companies that reduce discretionary spending first - thus minimizing
headcount reductions - tend to significantly outperform their
competitors over time. Downsizing your core, productive workforce is
like cutting into the “muscle” that runs your company. It may be
necessary to survive lean economic times, but it will impact and
probably decrease the performance of your company for a considerable
period of time. Workforce reductions tend to be difficult and
expensive, and frequently do long-term damage to a company’s culture,
knowledge base, and morale. They are best viewed as the last resort
for reducing costs, not the first. Instead, ask employees if they will
make temporary concessions - like time off accrual policy reductions,
unpaid leave, salary reductions, and shortened work schedules - rather
than undergo layoffs. A cost cutting survey is an effective mechanism
for identifying costs that can be eliminated and aligning the company
behind these cost cutting efforts. Make it clear that the cuts are
being made so the company can avoid having to make staff cuts. But do
not promise that workforce reductions will not be necessary.
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