Taking people costs out of your business

January is the perfect time to start thinking about how you’ll reduce costs and achieve growth in the year ahead.

In difficult trading conditions, companies often jump straight in and make redundancies when a prudent review with an experienced eye would reveal significant savings and avoid such drastic action.

In our latest blog, we look at where savings can be made. If you’re interested in a review of your organisation’s people costs and growth potential, get in touch.

 

Here are some typical areas where costs can be shaved.

Administration – if you still have manual systems requiring data entry you are costing yourself money.  It is worth investing in a good self service system that links directly to payroll. Likewise administrators will always ensure they have enough work. Consider outsourcing administration to a third party or removing it all together.

Appraisals – So many businesses still have clunky manual appraisal systems eating up time, money and morale – rarely are they the performance driver some HR professionals would claim they should be.  There are much more cost effective alternatives. Make sure you know about them!

Employee Benefits – It’s always important to review the cost of employee benefits annually and look at alternatives. If your business has grown since you first chose a provider, you may have more bargaining power for a better deal.  Consider removing benefits and replacing them. Ask your staff what they would appreciate from you.

Terms and conditions – If you have made your benefits contractual, re-negotiate contracts with staff to give yourself flexibility again. Take the opportunity to look at the  hours your staff work, how much holiday they are entitled to and the terms of your sickness absence policy and procedure compared to reality (i.e. many companies have contracts saying they only pay SSP yet they regularly pay staff in full when they are off sick).

TUPE staff – Since the change in TUPE regulations in January 2014, it is now possible for employers not to have to honour so called static terms negotiated by collective bargaining. This is particularly relevant if you have taken staff from a public sector environment.

Equally if the economic trading environment you are operating in requires you to harmonise terms and conditions to avoid making redundancies you should do this.  Take care to ensure it is not seen as directly connected to the TUPE transfer.

Salaries – Make sure you are fully informed about the market rate for key roles in your organisation.  It’s absolutely fine to pay over the odds or a premium for someone that will be key to your business but do this too often and you will become uncompetitive.  Remember that recruitment agencies have a vested interest in pushing up salaries so make sure you are independently informed.

Recruitment – If you are fast growing, recruitment can become a big part of your people costs.  Are you paying out recruitment fees to a variety of agencies or have you negotiated a good rate with a few.  Would an in-house resourcing specialist be better for you.  Advertising directly via Indeed and Linkedin can provide good results. So can using university careers services for graduate level positions.

Overtime – If overtime is habitual it makes sense to incorporate into the individual’s salary and remove the entitlement. Take care to go for an average figure to ensure you make some savings.

Bonus – Bonus payments can be a great incentive when things are going well and targets are met.  However if you don’t have the results don’t pay them to avoid your staff feeling upset.  Make sure you have communicated with them about this and consider an alternative to soften the blow.

Review Flexible working – This can be a great way to hire and retain talented staff that want to work in a flexible way, often part-time or remotely.

However if your business has too many people working part-time and you are having to double up on costs to ensure the smooth running, you can review this and restructure.

Part time staff and holidays – Make sure that part time staff have pro rata and not full time holiday entitlements.

Managing poor performance – Let’s throw in a nice controversial one.  It is never ever cost effective to try and manage poor performance.  Especially at senior levels. It is actually much kinder to agree a settlement and move on.  Clearly in unionised environments or in large organisations there will be long winded policies to manage capability.  Our advice is to cut through this and reach an agreement.

Employees v freelance staff/outsourcing – The living wage is coming in as is auto enrolment making staff more expensive. Employers are increasingly use freelancers or outsourcing specific functions or tasks. Often things can be done quicker and more effective with freelancer or outsourced staff working along side in-house staff.  Consider whether this option is a route you should be considering.

Risk adverse HR advice – This will without doubt be the most expensive people cost in your business.  If you feel you are getting this, get a second opinion and compare and contrast.

Amelore can provide a complete review of your HR, people and employee admin costs. Contact us…….

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