If a company implements cost cutting measures, but these result in the business functioning in a less efficient way, all of the cost cutting put forward can actually be detrimental, as it will result in losses due to reduced productivity.
There are a few things that may be done in order to reduce costs without having too much impact on productivity. Here are some of them:
- Make a complete review of your costs
Before you figure out how you can cut your costs, you will need to find out where the money is going. By simply making a review of your expenses, you can help locate some areas where cost cutting can be made.
- Consider the impacts that changes can have on your productivity
By now, you have probably identified some places in which cutbacks and cost reductions can be implemented. But before you go ahead and implement these changes, there is a very important question that you will need to ask yourself: what impact will these changes have on your organization's productivity? Will these cost cutting measures mean that your business will have to function at the same level with reduced equipment or staffing? Can you realistically maintain the same level of productivity if you make these changes?
- Ask your employees for their input
Asking employees is a very good way of determining what costs can be reduced and most importantly what impact cost reduction will have on your productivity. Employees may be able to identify things that are redundant or services that your company pays for, but rarely takes advantage of. They can also tell you which products and services are essential to them doing their jobs properly.
- Think green when cutting costs
When you cut down on expenses, you also have an occasion to make your business more environmentally friendly in the process. One example is instead of giving out plastic bags for purchases made at your store, you can encourage customers to buy reusable eco friendly bags. Using recycled supplies or refurbished equipment are other examples of measures that can be taken to make your company more green.
- Keep a close eye on expenses and productivity
Once you have implemented the changes, you should watch your numbers closely to see what impact they have had on your company. See how expenses have gone down, but also you should consider your productivity and output levels. Doing so will allow you to verify if the changes that you've made have had a significant impact on your productivity or not. You can then make adjustments if they become necessary.