8 Tips to Control Your Staffing Costs

In most companies, the largest expense is their employee.  Now I want to frame this article with a clear understanding that your team is essential and indispensable, and really not an expense.  Still, I want to share with you 8 sure-fire suggestions to help you control your staffing costs.

1. Tie compensation to value created, not time served.
   Too many businesses reward staff with raises, bonuses, and perks (e.g. vacation time, etc.) based on years of service. I strongly encourage you to shift the conversation to be about value created.
2. Bonuses and benefits are not “rights” but tied to performance (both individual and company).
   Any bonus that is regular and expected soon becomes “base”.  How do you frame your bonuses?  Are they are “right” or are they a reward for value created?
3. For creative and interesting work let intrinsic rewards rule.
   This means don’t try to find financial incentive systems to overly control or encourage behavior, but instead, for interesting, creative work, let the work itself (and the feedback your team gets) be the driving force.
4. Consider cuts to your admin team, or at the very least, grow this part of your team slower than your sales.
   Most service and administrative departments can be cut by 1 in 4 with no impact on quality of work. Many can handle 1 in 3 cut with no significant negative impact.  Remember, work expands to fill the time, and not all this expanded work creates value.
5. Stop all “make work”.
   This is a follow up to suggestion four.  The best way to cut “make work” is for your staff to  have full plates that force them to prioritize and leave lower level items undone, or done good enough. Also consider your company culture.  Is it encouraged and championed in your company for lower level team members to powerful champion cutting low value legacy “make work”?
6. Cut wasteful meetings (or at least cut time in half).
   Do you really need all the meetings you have each week or month? Couldn’t you cut the attendance list or meeting time by half and still get the same or perhaps a better result?  Clear agendas and firm facilitation make the meetings you do have more productive.
7. Twice a year issue a “full benefits report” to every employee.
   On that report lay out the full financial value of all benefits your company pays to them –directly and indirectly.  This includes the dollar value of their salary, bonuses, medical, vacation time, FICA taxes, etc.  The reason to do this is to keep everyone clear that the money they receive twice a month in their take home pay check is just part of what the company pays to them.
8. Cut your low performing team members now.
   Get over your fear of firing people (low performers cost too much to carry.) As soon as you know that you have a team member who just isn’t going to cut it, make the decision to help them move on to their next career position versus just staying in limbo with you.  It’s better for them and it’s better for your company too.

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