Economizing Labor Costs: Strategies for Sustainable Growth
The last in this three-part series on Economizing Labor Costs, today’s highlights cover the Employee Experience and what businesses can do to:
- Bolster employee development and retention
- Enhance employee performance management
- Create salary plans for continued growth?
Investing in Employee Development and Retention
While reducing labor costs often implies cutting expenses, investing in employee development and retention can also be an effective way to save money in the long term. High turnover rates are costly due to the expenses associated with recruitment, onboarding, and training new employees. Companies in 2024 are increasingly focusing on retaining top talent by offering development opportunities, and pathways for career advancement.?
Companies are also looking at ways to onboard at lower costs by partnering with staffing agencies that can hire, coach, and help manage contingent labor pools on a trial basis before companies make a larger investment in the wrong candidate. During the trial period, many of the KPIs noted below should be evaluated and determined early on if the candidate is the right fit. When the right candidate emerges, hire quickly - this lets the employee know that you value their contributions and are ready to make that investment. Remember, the employee is investing their time and talent to showcase their skills and commitment.
Upskilling and reskilling programs are particularly important as technology continues to evolve. By investing in training that aligns with new technological advancements, businesses ensure their workforce remains productive and relevant, thus reducing the need for constant recruitment and layoffs.
Before standing up a development program, be sure you are investing in the right people. How to identify the right people to invest in? Here are a few things to consider:
1. Performance and Consistency
- Consistently meets or exceeds performance expectations.
- Demonstrates a strong work ethic and reliability in delivering quality results.
- Shows initiative and takes ownership of their work.
2. Adaptability and Willingness to Learn
- Open to feedback and eager to improve skills and performance.
- Shows a genuine interest in learning new things, taking on challenges, and embracing change.
- Demonstrates the ability to adapt to new processes, technologies, or responsibilities.
3. Proactive and Initiative-Taking
- Proactively seeks out opportunities to contribute beyond their assigned tasks.
- Takes the initiative to solve problems or improve processes without needing direction.
- Displays enthusiasm and ambition for growing within the company.
4. Teamwork and Collaboration Skills
- Works well with others, showing a cooperative and collaborative attitude.
- Builds positive relationships with colleagues and contributes to a supportive team environment.
- Displays strong communication skills and the ability to work effectively across departments.
5. Leadership Potential
- Demonstrates leadership qualities such as taking charge during group tasks or projects.
- Shows an ability to influence and motivate others positively, even without a formal leadership role.
- Possesses problem-solving and decision-making skills that are valuable for future leadership development.
6. Alignment with Company Values and Culture
- Aligns with the company’s mission, values, and long-term goals.
- Shows a commitment to the organization and a genuine interest in contributing to its success.
- Exhibits behavior and attitudes that reflect the company culture and positively impact team dynamics.
领英推è
7. Resilience and Perseverance
- Maintains composure and effectiveness under pressure.
- Shows resilience in the face of setbacks and demonstrates a problem-solving mindset.
- Is willing to take on challenging tasks and learns from mistakes to improve.
Identifying these attributes in an employee indicates that they have the potential and motivation to grow, making them a strong candidate for your business and development investment.
Enhancing Employee Performance Management
Performance management is crucial for economizing labor costs effectively. In 2024, businesses are increasingly relying on data-driven performance management systems to evaluate employee productivity accurately. By setting clear performance metrics and providing regular feedback, companies can identify high-performing employees and reward them accordingly, while also addressing underperformance in a timely manner.
Incorporating performance bonuses and incentives tied to productivity targets can also motivate employees to perform efficiently, thus reducing the need for a larger workforce to achieve the same level of output.
Salary Plans for Continued Employee Growth & Retention
Fair wages is another way to improve performance. In today’s economic climate, everyone needs to earn a sustainable income. What does that mean for your employees? Ability to afford childcare, commuting costs, and basic living expenses. If you would like to review Spherion’s Salary Insight Guide, reach out to daisylilley@spherion.com to request a copy.
If businesses are investing in development plans, as the employee learns new skills, adding more value to the business, the salary should reflect that as well. These two things go hand-in-hand. With that in mind, businesses should have a tiered model for increased wages that aligns to the skill level.
The risk of NOT making the full investment (development + salary) in your newly trained employee is, turnover. Employees will continue to 'chase the money' and you just made them more employable. Another reason why the evaluation period during the temp/contingent cycle is critical to success for both employer and employee. Consider the temp cycle your time to shine!
Conclusion
Economizing labor costs in 2024 requires a balanced approach that combines technology, flexibility, and strategic investment in talent. Companies must remain adaptable, leveraging new technologies while embracing flexible workforce models and upskilling programs. By optimizing processes, managing performance effectively, and redesigning benefits programs, businesses can reduce labor costs sustainably while maintaining a motivated and efficient workforce. As the global economy continues to evolve, these strategies will be essential for companies looking to thrive in a competitive market.
Staffing partners such as Spherion, allow companies the flexibility to achieve sustainable growth through their investment and partnerships in leading edge technologies and vast talent pools to support long-term growth plans.
All the best,
Denise
8398 Six Forks Road Suite 104, Raleigh, North Carolina | 919-873-5588