Keys to optimizing personnel include selection, training, and motivation. Having the right people, who are knowledgeable, capable and well-prepared, and who are eager to work will be fundamental to the success of any business.
Some suggestions for optimizing costs include:
Clearly define responsibilities and expectations, and jointly agree on objectives.
Do performance evaluations on a regular basis and provide additional training as necessary.
Give salary increases based on productivity or on the completion of objectives or goals.
Provide incentives, such as profit-sharing, that give each employee a stake in the business results.
Delegate responsibility to ensure that the person closest to an operation or cost center is in a position to make decisions or recommendations.
Cover only the positions necessary – avoid overlap and redundant duties.
Do time analysis to monitor productivity and to keep overtime to a minimum.
Analyze the reasons for absenteeism. Consider a flex-time system, a given number of sick days or personal days off. Make personnel changes if necessary.
Prepare for meetings in advance – distribute an agenda beforehand.
Avoid unnecessary or inefficient meetings.
Make business trips only when necessary. Person-to-person meetings and client visits are important and can add significant value if done appropriately.
Control travel expenses. Combine trips if possible, quote airfares and hotels, use public transportation when possible.
Get quotes from different insurance companies or other providers of employee benefit plans. Contract reasonable deductibles and co-payments for health insurance. In general, provide good benefits at a reasonable cost.
Reducing Overhead and Other General Expenses
Overhead expenses are present in every business, from a small home-based business to a large production facility, and some of the same cost-control concepts can be applied in all of them:
Turn off lights or other energy consumers when not in use. Automatic light switches may be a useful option.
Maintain an appropriate temperature – not too cold in summer, not too warm in winter.
Control the use of office supplies. Keep them in a safe place, in an orderly manner, and assign responsibility. Keep an adequate stock, but don’t oversupply.
Control the use of the telephone. Choose calling plans that most closely fit the needs of the business and avoid overages.
Use fax machines as necessary, when they are the most efficient form of communication.
Use e-mail efficiently and prudently. While the cost may be minimal, the cost in terms of productivity can be substantial.
Choose the most efficient postage or courier rates based on need. It may not be necessary to send everything overnight.
Carry sufficient insurance coverage to adequately cover risks. Higher deductibles for incidents with a low risk of occurrence may reduce premiums.
If possible, negotiate rent or lease contracts.
Design, implement, and carry out an internal control program to safeguard all assets.