11 Ways Companies are Cutting Costs Without Firing Employees

Written by BillShrink Guy

To hear the media tell it, the entire business world is in flux. But not every company is succumbing to economic despair. While many are laying off employees, closing offices, and slashing budgets, others are preserving employee morale and staying afloat without such painful sacrifices. Following, are twelve ways that these praiseworthy businesses are avoiding layoffs and staying the course.

Reducing hours worked per week


While reducing the hours each employee works per week is not the most popular tactic, it is infinitely preferable to losing one’s job. Even scaling back from forty hours a week to 35 can go a long way toward keeping the workforce intact without bankrupting the company. And for those employees who aren’t living paycheck to paycheck, the extra time off can even be a welcome change. The New York Times writes about a few maverick managers who have experimented – successfully – with a 24 hour work week.

Offering flexible scheduling


One way to soften the blow of reduced hourly workloads is to let employees choose their own schedule. By requiring employees to be present for “peak” hours but letting them choose their remaining schedule, businesses can counteract the unhappy necessity of cutting hours by giving employees a small sense of control over how it gets implemented.

Auditing office supply expenses


Trivial as it may seem, runaway office expenses can add up to serious waste. Smart businesses are striving to audit these expenses and cut them to the bone before conducting any layoffs. As EffortlessHR.com correctly remarks:

“Employees need the tools to get the job done, but do you need twelve different colors of Post-Its and six different kinds of pens?”

The bigger the company, the bigger impact these kinds of unexamined office expenses can have on the employment budget.

Eliminating or reducing executive-level bonuses


When a company’s economic forecast worsens to the point of pay cuts becoming necessary, these often begin at the executive level. Motorola has set a terrific example in 2009 by announcing that it would be cutting the salaries of its co-CEO’s by 25%. Starting pay cuts at the executive level achieves two goals:

1) Greater cost savings, as executive salaries are higher than rank-and-file; and,

2) A sense of shared sacrifice that gives employees less reason to protest their own pay cuts (if they become necessary).

Percentage reductions in pay


The most unpopular cost-cutting measure short of an outright layoff is reducing an employee’s pay. Nevertheless, when times are tough, there is often no other way to keep everyone on board than to temporarily institute a percentage reduction in pay. Common reductions are 5% but these can be as high as 10% or more.

Offering employees unpaid vacations/imposing mandatory holidays


Not every employee at every company is living paycheck to paycheck. For these fortunate folks, the unpaid vacations being instituted by a growing number of businesses are a most welcome perk. Others may not be as supportive of this tactic – described by MSNBC as “the vacation no one wants” – but by scheduling unpaid vacations around the same time, businesses can limit employee suffering and save money without layoffs. Another way companies are saving some money is to schedule occasional mandatory, unpaid holidays. While this is heavily criticized under normal circumstances, it is more palatable during recessions, when the alternative could be total loss of income.

Substituting telecommuting for in-person work


One of the most painless ways to cut costs without cutting jobs is to substitute telecommuting for in-person work. This is especially attractive for support and IT positions, whose duties can be carried out remotely without the overhead of keeping someone fed, heated, or cooled in an office (or insured, et al). And unlike many of the job-saving measures we’ve discussed, few employees complain about working from their homes.

Eliminating unnecessary traveling and meetings


For many of the same reasons telecommuting makes sense, companies that eliminate unnecessary traveling and meetings may find it easier to retain more of their employees. Instead of shelling out big bucks for airfare and hotel stays, cost-conscious companies like Bayer Corp. are conducting meetings virtually using technology that allows people to “chat in real time and watch each other’s life-size images on screens that created the effect of being at the same conference table down to the bottled water, coffee cups and laptops.”

Hiring freezes


A company struggling to retain its existing workforce has no business hiring new employees. As a result, many businesses have implemented temporary hiring freezes that limit the workforce to those employees already on the payroll. State and municipal governments have frequently utilized this retention strategy as well.

Salary/raise freezes


Going hand-in-hand with hiring freezes are salary and raise freezes. As the name implies, this is simply a company-wide policy of holding everyone’s salary to its current level and agreeing to forgo pay raises while the company gets back on solid footing. As with so many other measures discussed, this policy is never celebrated, but still preferred to layoffs.

Eliminating or scaling back corporate parties, luncheons, and events


In the same vein as cutting wasteful office supply spending, eliminating or scaling back corporate events can provide a much-needed boost to a company’s budget. In recessionary times, luncheons and parties are luxuries when it comes down to choosing between them or keeping people employed, and this is one obvious place to save a few bucks when the opportunity arises.

11 thoughts on “11 Ways Companies are Cutting Costs Without Firing Employees

  1. Johannabrooke

    I'm guessing that not all these “tips” are better to be implemented at the same time.

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