Cutting costs is the oft-repeated phrase that companies are using to meet the downturn in the economy and the declining revenues and sales. For most, cost-cutting translates to job cuts in the organization. But there are other ways to tighten the belt and do operational budgeting. We have a few suggestions and pointers to help you tide over the tough times in your organization.
We believe that in times of downturn, instead of getting rid of employees, concentrate on retaining talent and star performers. In a bid to cut costs, organizations tend to get rid of high salaried employees or those who are perceived as high maintenance.
Research has shown that new talent costs more to train and onboard. The hiring process takes 42 days on average, along with a minimum spend of $4,129.
Automation and Digitization
Make use of automation and digitization. Adopt digital technologies such as Robotic Process Automation (RPA), Artificial Intelligence (AI), voice-first solutions, social media, and others that can help turn routine HR processes such as payrolling, attendance tracking, etc. automated. This will prove efficient and cost-effective, freeing the team to do more work.
The same can be done by going digital in the hiring process. This will help save time and weed out the right candidates that fit the profile you are looking for. RPA in HR can reduce one-third cost by automating recruitments, screening, assessments, payroll, learning, and many other HR jobs and processes.
An aversion to implementing technology, inertia, and a reluctance to take a tough decision regarding personnel have resulted in almost 50 per cent companies not adopting the latest HR-related technology and software.
Training and Mentoring Programs
Training and mentoring improve efficiency and productivity as all job ambiguities are lost, and there is clarity of functions and expectations. If the team is well handled and run, then any absences and lacunas can be handled by other members without any loss in productivity.
Promote internal talent
It has been found that promoting internal talent is 18 per cent more efficient than hiring external candidates to fulfil a job. Additionally, research says that almost 61 per cent of new talent leaves or is fired for inefficiency within the first three months.
This is because it takes time to learn the new ropes, adjust to the culture and deliver in the job, which an internal hire can do better as he or she are already exposed to the culture of the organization.
Trim the fluff
Do away with unnecessary costs. It can start with the smallest savings of avoiding unnecessary printing of papers and filing. Make it strictly on need-to basis. All communications can be done digitally. Office supplies need to be used stringently.
Consolidate events and office parties. Celebrations of milestones can be toned down. Instead of long celebratory lunches, have an internal session with a cake or something similar.
Team outings can be combined with training and bonding sessions. Cut down on duplication of processes. Use technology to do the tasks— online marketing, cutting client interactions, face to face meetings through teleconference and email.
Outsourcing and Freelance
Outsource work that can not be done in-house rather than hiring someone to do it. Hire freelancers whenever possible as it helps avoid the headache of payrolls, onboarding, etc. A big advantage is that one can hire the best in the business at a reasonable cost without having to train them.
Especially start-ups and small and medium companies do not need to hire a whole team for a specific task; one should instead outsource it to an agency or freelancers.
The goal of any cost-cutting exercise should be to eliminate any task whose cost of doing it exceeds the business value it provides.
Identify the gaps, audit the tasks, do a cost-benefit analysis, count the impact, and then only implement.
“Successful HR leaders focus on cost optimization as an ongoing discipline, not as a one-off exercise,” says Gartner senior executive advisor Matthias Graf. “Cost optimization strategies should look beyond cost-cutting and proactively promote options for immediate efficiency gains while not compromising on the long-term impact on business performance..”