Cost reduction strategies are a necessary aspect of improving profitability. Since talent is typically the highest expense for most businesses, associated costs are often the target of such strategies. However, many companies approach cost reduction in a way that, while saving money in the short-term, adversely impacts their long-term margins. For example, eliminating certain perks or programs may result in immediate cost reduction, but it can also harm employee morale and productivity, which over time hurts outputs and thus profits.
It doesn’t have to be this way. Indeed, there are many cost reduction strategies that don’t elicit the same kind of negative side effects discussed above. Here are a few budget cutback ideas for your company that can help reduce costs and boost profitability for the long term.
Invest in a Better Time & Attendance System
In a wide range of industries – particularly those where shift work is common – labour costs are significant, and unfortunately overcompensation is common. Buddy punching, unsanctioned breaks, long lunches, early departures, etc., all amount to less time spent at work for the same amount of compensation. This affects employee outputs and makes your business less productive.
Investing in a more sophisticated time and attendance system – biometric technology, badge/pin readers, etc – can help ensure that all time is better managed, so that each employee is fairly compensated for the work they complete.
Improve Labour Costing Accuracy
Whether you work with clients providing a service, or you are a manufacturer that wants to ensure the cost of a product is consistent with the investment in it, it’s essential to track labour costs to identify profitability. Improving labour costing accuracy with the right tools can allow you to identify any labour cost issues and take the necessary corrective action. With the ability to accurately track costs, weigh work against budgets, and leverage business intelligence, you can make adjustments to ensure that profitability increases while costs are reduced.
Cut Down on Payroll Inefficiencies
Payroll is obviously a significant cost for any business, but inefficient processes are what cause it to really inflate. Errors, lengthy processing times, payroll inaccuracies and so on all contribute to high costs. Consequently, focusing on eliminating payroll inefficiencies is a great place to start with cost reduction. Transitioning to a more sophisticated system for payroll can produce significant benefits, automating manual time intensive processes, reducing payroll errors, and ensuring that things like attendance, hours worked, overtime and compensation all reconcile. This helps reduce the time it takes administering payroll, improve payroll accuracy, and ultimately, drive total payroll costs down.
All of these budget reducing ideas are part and parcel of an effective workforce management solution. By deploying these strategies within your workforce management system, not only can your employment costs be reduced, but other areas of your business can benefit as well.