Control Costs by Strategically Reducing Payroll Expense

OED Certifed Advisor Dana Komar spotlights the difference between slashing payroll and strategically reducing costs.



One of the most effective ways to reduce payroll is to minimize scheduling and reduce the overall number of people you employ. However, adjustments should not be done blindly as the wrong decisions could have a negative impact on your operation. The first step to make sure that doesn’t happen is to use past sales data to truly understand the demand patterns of your customers. If you have hourly employees, you need to know demand by hour. If your employees are on salary, it is sufficient to evaluate demand at a more aggregate level.

The next step is to determine the true capacity of who or what produces your product—whether it be a machine or a person. Don’t forget about machine downtime and employee personal time. Then using your demand analysis, schedule employees and machines operators so that their total production matches your expected demand. This will ensure you do not waste money on excess capacity, and that you have enough for the operation to run smoothly.