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Where Do Budget Cuts Start?
Senior Advisor of Morgan Stanley, John Mack, told PBS's Charlie Rose, back when the economy collapsed, that he didn't take a bonus in years 2007 or 2008, and he suggested other CEOs and top managers should do the same. Sure, top CEOs may be able to afford missing a bonus or two, but what about everyday Americans? "That," said Mack, "needs to be decided at every company, on every level." What Mack meant by that statement is that businesses, large and small need to come up with ways to trim their budgets and keep their people working. That is as true now as it was six years ago.
Maybe the holiday bonus can be reduced, but to truly see savings in your payroll expenses and personnel, who are your most important and most expensive resources, where should you start?
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A Trimmer Waistline
Trimming your budget without losing people can be tough, but it can be done. Your resources need to be examined from all dimensions, not just the payout of cash. Can company cars be eliminated, or can you revisit your health insurance package and offer the same plan with a higher deductible for less premiums? If your company pays for daycare, don't cut it out--revisit it and offer working moms and dads remote access solutions for telecommuting like GoToMyPC. Then they can work from home and still watch the kids.
Instead of that big company picnic this year, begin an employee recognition program and make it available to everyone. A bell boy at a hotel should have the same chance of winning each month as a top-level manager. Before you say, "no one wants that," make the recognition program interesting and offer unique ideas like additional company investments to their retirement program.
Even small business can save dollars if done the right way. One independent body shop in New Mexico that employed only twenty people and was seeing tough times in 2009 offered job sharing where painters and technicians worked three ten-hour days with their sharing partners working the other half of the week. "I didn't lose my job," said one technician, "or my benefits." And the employer saved on the extra social security and Medicare taxes. The job-sharing program in this company allowed for employees to cut on after-school expenses as well.
Further, most state governments have some sort of pay-to-train program where they will pay all or part of an employee's salary in turn for training them in a technical field. If your business is short on good personnel resources, why not train from the bottom up? While the immediate future may still be hazy for your company right now, rethink what you are doing from top to bottom. Talk honestly with your personnel and find out if cutting out paid personal days or saving vacation pay for another time is workable for them. Use your best resource, your personnel, for ideas on how to trim the budget but keep the workers. Getting their advice also helps to get them to buy into cost-cutting measures.
John Mack said both Morgan Stanley and Goldman Sachs have been responsible at top levels and the executives understood that the bonuses were gone for a while. Nevertheless, company stock will often work as a choice. While your business may not compete with these top dogs, you can still find ways to trim your waistline.