Salary Expense
Part 2 of a 2 part series
Warning Signs:
- Rising labor costs as a percent of sales.
- High turnover of employees.
- Evidence of inadequate training.
- Employee/supervisor conflicts.
- Increase in employee absenteeism/tardiness.
- Confusion/duplication of effort.
- Signs that a process needs improvement:
- Falling profits with stable or growing sales, stable prices and costs.
- Net sales to total assets out of line with industry averages.
- Unnecessary duplications.
- Unneeded income.
- Bottlenecks.
- Missing information.
- Missing resources.
- Poor morale.
- Rejects.
- Customer complaints.
- Absenteeism.
Steps to Improve: COST CUTTING
- Eliminate employee overtime.
- Reshuffle staff duties to control costs.
- Shave labor costs with part timers.
- Consider outsourcing positions requiring a few people with high skills.
- Use independent contractors to slash payroll.
- Consider leased employees for seasonal employees and busy periods.
- “Lease” your employees to other businesses.
- Use temps where advantages exist.
- Consider contracting out work: overloads; space/equipment limitations.
Steps to Improve: COST CUTTING IN HARD TIMES
- Downsize in hard times.
- Put a freeze on hiring and routine raises.
- Shift to six-hour work day.