Estimated reading time: 3 minutes
I recently saw the question “How can organizations save money?” in one of my Facebook groups. The group had some very good suggestions like conducting a benefits audit and reviewing all vendor contracts. But there are a couple of things that organizations need to think about before just cutting expenses, especially employee related expenses.
Call me a realist, but I’ve always believed that organizations are in business to make money. This doesn’t mean that organizations don’t practice corporate social responsibility and don’t give back to their communities. But at their core, companies want to make money. Even non-profit organizations want to make money so they can fulfill their mission. So, organizations need to think about finding ways to increase revenue. Companies don’t grow just by cutting expenses. They grow by increasing profits.
Of course, one of the ways to improve the revenue line is by keeping expenses under control. Organizations should look at regularly occurring expenses to make sure they’re being used. No different than we do in our personal lives. For example, the fees for those very convenient subscriptions programs can add up. And if we’re using them – great! But if we’re not, then we need to ask why and possibly make adjustments or cancel them all together.
But there’s another way that organizations can increase revenue. It’s by getting employee feedback. Front line employees have great suggestions for how to increase revenue and decrease expenses.
True story. Years ago, I worked for a company that was forecasting a shortfall of one million dollars. This was a lot of money to the company, and they were trying to figure out how to deal with the situation. Finally, the company decided to go to employees with the problem and a potential solution.
They told the workforce about the million dollar shortfall and said if any employee (or group of employees) could come up with an idea that would either 1) decrease expenses or 2) increase revenue, the company would consider it. The idea would be vetted in the organization, meaning that not every idea would automatically be implemented. And if the idea decreased expenses by $XX or increased revenue by $XX, then the employee / group would get XX%.
Forgive me because I don’t remember the exact amounts and percentages from back then, but you get the point. There was a minimum dollar amount that needed to be saved or generated. It wasn’t hundreds of thousands of dollars, but it was in the tens of thousands. If it worked, then the employee or group would get a thank you bonus equal to a percentage of the savings or monies generated.
The program was a huge success. It not only generated the one million dollars that the company was looking for … it generated five million more.
The point of my story is this. Before the company just starts cutting headcount or benefits (and potentially angering employees), organizations facing a challenge should share that challenge with employees. Because employee feedback might have a great idea that would help fix the problem. And if employees help fix the problem, thank them. And thank them well. You’ve probably seen the same photo I have from the company that made $90 million dollars last year and decided to thank employees with cupcakes. Granted, I like cupcakes too, but I hardly think the thank you aligns with the effort.
Organizations are always going to have some sort of challenge that they’re dealing with. Start putting a process in place to ask and get employee feedback. Employees have great ideas. Use them.
Image captured by Sharlyn Lauby after speaking at the SHRM Annual Conference in Las Vegas, NV45