Government Business

With so many gloomy forecasts in the media about the economy, it’s easy to see why employers are looking to manage costs. And of course for many organisations their single biggest cost is their salary bill.
    
In tough times it’s always tempting to see cost management and cost cutting as the same thing.  And where salaries are concerned, this often simply means cutting back on staff numbers. In the long run though, this can lead to a reduction in performance, loss of morale, poorer sales and so the downward spiral goes. But facing up to a difficult time doesn’t always have to be about losing staff.  Here are some ways in which you can avoid falling into the downward spiral;

• Don’t automatically rush to replace leavers. It’s always tempting to think that when someone leaves you need to fill the vacancy quickly. But by standing back and being objective, you may find that you can manage with less heads, and without the need to take drastic cost cutting action.
• Be honest with your employees. Make sure that through good communication you set out the challenge the organisation faces - but don’t turn this into a threat.
• Carefully benchmark your current salaries against the market. This will help you quickly determine whether you are spending more than necessary to recruit and retain the skills that will see you through the difficult times. 
• Think about what skills you really need and whether they already exist in your current workforce. It’s very possible that by developing and managing these skills better, you will get more out of your existing salary spend.
• Finally, if you find that you can’t avoid making staff cuts, take some professional advice on the best way to do this. Whilst nobody likes this kind of situation, it’s vitally important that you are seen to be fair and reasonable so that you retain the trust and respect of the staff that you lose and those that you keep. After all, you may well be relying on this latter group to keep you in business in the future.