Effective cost-cutting

Alternatives to redundancy are being looked at more and more as employers attempt to retain key members of staff. Fortunately, there are a few alternatives to consider before resorting to redundancy procedures.

Staff wages represent the highest cost to a business, so looking at this area is a good place to start cutting costs. Implementing pay freezes or even pay cuts where necessary will save your company a significant amount of money and still allow you to keep your existing workforce. It is worth remembering that, in the current job market, employees may very well settle for a pay freeze or even a slight pay cut in return for job security.

As well as looking at your employees' base pay, you should also reassess bonus schemes within your business. Bonuses are not a statutory contractual right and therefore you should look at either decreasing bonuses or removing them altogether. As well as weighing up cutting bonuses, you should also remove overtime; if you have to explore redundancy then this would suggest that you do not have enough work to justify this additional expense.

Depending on how dire the financial situation is, there is the possibility of turning towards a pay-deferral scheme - these are agreements between you and your employees whereby there is a temporary deferral in pay that is then given to an employee at a later date. This is quite a complex option however and you should seek professional advice before deciding to use it.

Implementing a flexible working system in your business may be an ideal choice for both you and your employees. While the employee can enjoy a better work-life balance and feel a little more in control of their working pattern, as an employer you can benefit from the new working pattern: you may be able to attract new business by offering better access to your services.

Is the downturn in trade affecting only one area of your business? If so, you may want to assess the possibility of redeploying your resources from one area to another in order to keep your business running smoothly. Moving your employees between different areas of the business will keep them motivated and active while simultaneously servicing the needs of your company.

The day-to-day running of your business will involve a lot of controllable costs that you may not have thought about. Assess the way in which you perform different processes in your business and look for a more cost-efficient way of doing it. Filing reports electronically rather than in hard copy would save the company money on both printing and paper but would not throw up a big inconvenience to the business. Basic expenses such as stationary orders should also be scrutinised and only items needed by the business immediately should be ordered. Encouraging staff to turn off lights as they leave a room or allowing them to wear jumpers while the heating is turned down are all available, viable options.

These suggestions represent only a few of the available options; other alternatives should be identified and considered before you decide to make redundancies. Most importantly, you should look carefully at any option you decide to use to ensure that it is genuinely beneficial to your business.