This is how you can cut cost without firing employees

Despite making several changes, your profitability continues to decline against rising business costs, which is putting tons of pressure on company balance sheet and giving sleepless nights to promoters. Perhaps firing team members seems to be the only visible solution to cut down the cost.

But wait!

You don't need to fire your employees in order to bring down the overall cost. Here are a few methods that you can follow and get through this tough time-

Image credits: www.africanstudio.com

Involve them in decision making

Tough days don't spare anyone, and you need to make sure your employees are well aware of this fact. When the organisation is going through a tough time, ask them for suggestions about minimising costs. Not all their suggestions may work, but they'd still feel more connected to the work and accountable for their actions.

Say no to extra costs

This is not the time to incur extra costs like pay raise, bonuses, additional hiring, business trips, office parties and team outings. Cutting down extra costs may not have a significant impact on your balance sheet, but as they say, “something is better than nothing,” so you should definitely cut them off right away.

Mandatory unpaid extra leaves  

It may not sound fair, but ask your employees to take some time off from the job and spend it with their friends & families. These mandatory unpaid extra leaves won't only help you save a significant amount of money but will also allow your employees to reassess their strengths and weaknesses.

Reduce working hours

Rather than firing them, look for alternative options when you're not in a position to pay employees their salaries. By reducing weekly working hours, you can indirectly cut their salaries and save a significant amount every month. From five-day or six-day week model, you can shift few employees to a three or four-day week model. It may be a good chance for them to pursue their hobbies or take freelance work assignments in this free time.

Cutting salaries and bonuses of the senior management team

During a tough time, rather than putting the entire pressure on employees, you should also be ready to feel the heat. There is nothing wrong in cutting the yearly bonuses or salaries of CEO, CIO, CFO and other senior management executives. This cut will help the business run smooth without having to opt for a mass layoff.

Virtual office

Another way of cutting cost is opting for a virtual office. Except for a few key employees without whom your business can't run, you can request other employees to work from homes. The space that gets freed from this initiative can be rented out to someone else and used as an extra source of income. Even if you run your business from a rented space, this practice will allow you to cut monthly rent by a significant margin.

Say goodbye to contractors or part time employees

If it has come down to a point where you can't avoid employee layoffs, it's better to first let your contractors or part-time employees go and then think about the core team members. It shouldn't be the other way round.

Besides, you can also go for salary deductions to cut down extra costs. Remember, something is better than nothing, and your employees will definitely understand the criticalness of your move.

Do you have any better cost-cutting ideas? Share them in the comment section below!