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Saving on Staff Expenses: What are the Consequences?

When crisis begins, almost all the companies prefer to save money by cutting salary funds. There are 5 popular ways of the “staff optimization”:
-staff reduction
-lower salaries
-lower social compensations and less support
-shorter working hours
-staff renting (outstaffing)

By minimizing staff you can save your salary funds, create more efficient staff structure, and boost productivity and motivation. On the other hand, you can`t fire the employers from the socially protected categories. Moreover, when you fire someone, you must pay appropriate compensation.

Key advantage of lower salaries is the opportunity to save your staff and business processes. At the same time, the motivation of your staff will be lower, and their productivity will decline as well. The most efficient employees will probably leave your business in order to find better financial options.

If you cut social support while keeping the same salary and the same staff, you can diminish your expenses. However, in this case motivation will go down and productivity as well. So, for example, if you don`t provide your sales manager with corporate telephone number, he or she will make less calls and you will get less profit.

If you choose shorter working hours, you can get a good reason to cut wages.  When the situation improves, you can easily mobilize your staff and restore your normal schedule. Although some of your employees will start looking for a new job, and their productivity along with the discipline will decline.

Very often, the companies in crisis choose to use outsourcing for some business processes. This strategy helps to save social support funds, diminish the cost of accountancy and HR-service. On the other hand, the efficiency of the outsourced professionals is hard to control, and they may be not loyal to the company. That is why outstaffing should be implied carefully, and only well-reputed HR-agencies can be relied on.