These Cost Reduction Initiative Examples Could Help Prevent ...

5 cost reduction initiatives that minimize the need for layoffs · 1. Institute a hiring or headcount freeze · 2. Cut business travel · 3. Encourage ... Helpingbusinesseschoose bettersoftwaresince1999SoftwareCategoriesServiceCategoriesGuides&ResearchWhoWeAreForVendorsWriteaReview TrainingTechnology TheseCostReductionInitiativeExamplesCouldHelpPreventLayoffs PublishedApril30,2020by SierraRogersinTrainingTechnology Thesecostreductioninitiativeexamplesmayhelpyouavoidlayoffs. Economicdownturns,plannedcostcutting,companymergers,over-staffing—theseareallreasonsyourorganizationmightbeconsideringlayoffs. Whiletherearecaseswhereaworkforcereductionisnecessary,employeelayoffshaveconsequencesrangingfromdamagetoyourcompany’sreputationtoloweredemployeemorale. Ifyourcompanyiscontemplatinglayoffs,explorestrategiestodecreaseyouroverheadbeforetakingaction.Usetheseexamplesofcostreductioninitiativestoguideyourapproach,andkeepemployeelayoffsasalastresort. 5costreductioninitiativesthatminimizetheneedforlayoffs 1.Instituteahiringorheadcountfreeze Implementingahiringfreezeisastop-gapsolutionthatallowsforquickcostsavings.Typically,duringahiringfreeze,companieswill: Haltthehiringprocessforanynon-essentialroles Putanyrequisitionsforhireonhold Postponebackfillinganypositionsvacatedduringthefreeze Notcreateanynewpositions Onechallengingrepercussionofahiringfreezeisthatexistingemployeesmayhavetotakeonheavierworkloads,whichcanleadtoburnout,lowerproductivity,and—insomecases—resignation. Amoreflexible,relatedstrategyisinstitutingaheadcountfreeze,whereyourorganizationfocusesonmaintainingitscurrentnumberoffull-timeemployees.Advantagesofaheadcountfreezeincludetheabilitytobackfillanyvacatedpositionsandreplacelowperformerswithnew,high-qualitytalent. Forhelpkeepinganeyeonemployeeburnout,checkouttheseresources: 5EmployeeBurnoutSignsYou’reNotCatching TheBurnoutEpidemicPart1:WhyGoodEmployeesQuit TheBurnoutEpidemicPart2:HowYourCompanyCanPreventEmployeeBurnout 2.Cutbusinesstravel Whetherit’stoattendanexpo,finalizeabusinessdeal,orsimplyparticipateinmeetingsatanotherlocation,manypeoplerackupfrequentflyermilesbecauseofbusinesstravelthroughouttheyear.AccordingtotheU.S.TravelAssociation,directspendingonbusinesstravelbybothdomesticandinternationaltravelerstotaled$334.2billionin2019.Thatstatistictranslatesintoalotofreimbursementdollarspaidoutbycorporations,andinturn,strainonbusinessfinances. Duringtimesoffinancialhardship,organizationsshouldaimtoreducebusinesstravelbyatleasthalf.Leadershipshouldfocusonidentifyingandretainingonlythemostprofitablereasonsforbusinesstravel. Thegoodnewsisthatalthoughtheemployeemaynotbeintheroom,they’lllikelystillbeabletoparticipateinwhateveritwastheyweretravelingforinthefirstplace.Webinarsandlivestreamingatconferencesaregrowinginpopularity,andmanymeetingscannowbeaccomplished—sometimeswithevengreatersuccess—viavideoconferencing. Notsurewheretolookforhelpwithvirtualmeetings? Startwithourlistofthetop20webconferencingsoftwaresolutions. 3.Encourageemployeestoworkremotely Anotherwaytoquicklycutcostsistoshutdownyourphysicalofficespace.Noteveryworkerorbusinesscansuccessfullyworkremotely,butifitispossibleforyourorganization,it’sanadjustmentthatcanleadtonotablesavings.Someestimationsshowthatifemployeestelecommutedforjusthalfoftheirworkweek,itwouldsavethetypicalbusinessupto$11,000/year. Whilethepriceofaleaseormortgageishardertonegotiatedown,thereareanumberofoverheadexpensesthatwouldsubsideinthecaseofemptyofficespace: Utilities Janitorialservices Officesupplies Kitchensupplies Officeequipment Transportationsubsidies Rentedparkingspaces ProTip:Realestatecanalsobeoneofyourcompany’sgreatestassets.Unusedofficespacecanberented(withthelandlord’sconsent)orsubletforadditionalincome–listthevacancyonlineandsearchthesurroundingareaforpotentialsubtenantstogetstarted. Fortipsonmanagingaremoteworkforce,checkouttheseresources: StartEffectivelyManagingRemoteTeamsin3Steps GroundRulesforVideoConferencing 4WaystoImproveCommunicationWithYourRemoteTeams 4.Suspendretirementcontributionsandreducebenefits Toughtimescallfortoughdecisions,buteliminatingsomebenefitsispreferabletolayingemployeesoff.AccordingtotheU.S.BureauofLaborStatistics,benefitscostemployersintheprivatesectoranaverageof$10.37peremployee,perhourworked.Thataddsuptoanaverageof$21,569peryearforjustonefull-timeemployee.Thesenumbersillustratewhyemployeebenefitsareoneofthefirstplacestolookwhenitcomestocostcutting. Corporationsthatoffer401(k)contributionscanbeginbysuspendingmatchinguntilfurthernotice.Fromthere,financialplannersshouldturntheircostreductioneffortstowardeliminatingotherbenefit-relatedexpensessuchaspriceydentalplans,tuitionreimbursement,wellnessprograms,andeventhingslikecompanycars,rentedparkingspaces,andmealorcafeteriaofferings. Onethingtokeepinmindisthatmedicalinsuranceshouldbeprotectedifpossible,becauseit’sanimportantpartofanemployee’spersonalsafetynet.Ratherthaneliminatingmedicalinsurance,considercuttingthepremiumbyraisingemployeecontributionsandco-pays. Formorehelpbudgetingyouremployeebenefitscosts,checkouttheseresources: CalculateYourExpectedEmployeeBenefitsCosts HowtoSelectanEmployeeBenefitsProvider The4-StepGuidetoOfferinganExceptionalEmployeeBenefitsPackage 5.Considerafurlough Ifallelsefails,afinalalternativetolayoffsistofurloughemployees.Thereareafewdifferentkindsoffurloughs,butallofthemaremandatory,unpaidleavesofabsencethateffectivelyreducecosts.It’sexclusivelyuptotheemployertosetthefurloughterms. Forhourlyemployees,afurloughcouldbe: Fewerhoursperday Fewerworkdaysperweek Weeksormonthslong Becausesalariedemployeesearnafullweek’spayregardlessofhowmanyhoursthey’veworked,furloughsmustbeestablishedinblocksofatleastoneweekeach,andcanlastforuptoayear. Whilefurloughedemployeesdonotearnwages,oneadvantageoverlayoffsisthatfurloughedemployeesarestillemployed,haveaccesstotheirbenefits,andareexpectedtoreturntoworkafterthepredeterminedtimeperiodelapses.FurloughedemployeesmayalsostillbeeligibleforEmployeeAssistancePrograms(EAPs),abenefitthatbecomesevenmorevaluableduringtimesofstressoranxiety. Ifyoudon’tofferanemployeeassistanceprogram,it’sagreattimetogetstartedwithone. UseourcomprehensiveguidetoEAPstolearneverythingyouneedtoknowaboutofferingthisbenefit. Thebottomline:Communicateandkeeplayoffsasalastresort Forcompaniesinfinancialdistress,followingthesecostreductioninitiativeexamplescouldcircumventtheneedforlayoffs.Thatsaid,change(especiallyofthecost-cuttingvariety)canincitearangeofreactionsfromemployees. Leadershipshouldactivelycommunicatetherationalebehindcost-cuttinginitiativestomanagersofallaffectedbusinessunitsthroughouttheprocess. Ifallofyourlayoff-avoidanceattemptsfailtopreventtheneedforaworkforcereduction,bepreparedtoshowdocumentationofthestepsyoutooktoavoidthem. Whenitcomestomanagingateamthroughperiodsofchange,there’salotmoretolearn.We’vegotyoucoveredwiththeseadditionalCapterraresources: FromLegostoNetflix:3StoriesontheImportanceofEffectiveChangeManagement CraftingYourChangeManagementPlan:ABeginner’sGuide 3TipstoHelpBusinessLeadersCombatChangeFatigue LookingforWebConferencingsoftware?CheckoutCapterra'slistofthe bestWebConferencingsoftwaresolutions. Tags: Businesscontinuity AbouttheAuthor SierraRogers SierraRogersisaseniorcontentwriteratCapterra,coveringhumanresources,eLearning,andnonprofitswithexpertiseinrecruitingandlearninganddevelopmentstrategies.Withabackgroundinthetechandfashionindustries,shehasextensiveexperiencekeepingherfingeronthepulseofthelatesttrendsandreportingonhowtheyimpactourworld.Sierraenjoyscookinganddiningout,collectingvintagedesignergoods,andspendingtimewithherpetsathomeinAustin,Texas. 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