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Editor’s Note: This is the first installment of a four-part series that will explore 80 ways to reduce operating expenses. In these difficult economic times, these ways could be the difference between having a profitable year and one of significant financial loss. After all, every dollar of reduced operating expense goes straight to the bottom line of an annual profit-and-loss statement. Take these suggestions at face value, or modify them for your agency. Either way, please take a look. Shaving a few dollars here and there might just save a job.
There are many well-known and obvious ways to reduce expenses. For example, it is fairly common knowledge that hiring two or three part-time employees to replace the work done by one full-time employee who has left the organization (due to retirement, another job, termination, downsizing, etc.) will cost less. The hourly wage rate is likely less, and there is also a savings on employee benefit costs. But take a closer look at your labor expenses. Although some experienced managers may already know about and/or utilize some of the following strategies, these new ideas are worth consideration.
It is important to note though that every strategy presented in this series can potentially have an adverse effect. For example, continuing with the part-time/full-time strategy noted above, several problems may develop. There are additional training and supervisory costs in hiring new part-time employees, there may be a potential for lower-quality work, and the practice may violate a labor-union contract. Therefore, it is important to weigh the pros and cons of each strategy before implementing it.
1. Sick-leave incentive program. Create a program in which employees can opt to exchange a certain number of unused sick-leave days for a payout at 25 to 33 percent of a salary per day. This is an incentive to employees who continually use sick-leave days for questionable excuses, and often on days when you need them most.
