Trimming labor costs
can help avoid layoffs.
Trimming labor costs should be practiced at all times. By avoiding over-spending on labor, your company can avoid being put in a position of having to lay-off employees. Two effective ways to reduce labor costs are using independent contractors and outsourcing some of your company tasks. You will find that when you eliminate payroll taxes, benefits and payroll processing, your labor costs significantly drop.
Instructions
1. Analyze your current company operations to find areas where some of the work can be done by independent contractors or outsourced to other companies. Some examples of independent contractor tasks include website development, graphic arts and technical writing. Tasks that can be outsourced include manufacturing, technology management and payroll. When you use independent contractors and outsourcing companies, you are paying only for the service. You eliminate payroll costs such as taxes, vacation days, sick days, personal days and the processing of payroll checks.
2. Offer the ability to be an independent contractor to employees that may lose their jobs as the result of the changes. Trimming labor costs will have a negative effect on employees. If you can offer the chance for the employee to contract for his job, that may help soften the blow.
3. Move positions that do not require full-time status to part-time. Employees that work in the mail room accepting deliveries may not need to be in the building for a full work day. Reduce those positions to part-time, and make wage and benefit changes accordingly. Most companies do not offer benefits to part-time employees.
4. Create a four-day work week for employees who work in areas that can get their jobs done on a reduced schedule. Some departments that could do four-day work weeks include manufacturing, shipping and accounts payable. Reduce pay for each employee in ratio to the reduced hours.
5. Notify salaried employees that they will be asked to take a 20 percent pay cut. If you know the pay cut will be temporary, then let the employees know that as you make the announcement.
