In the wake of Covid-19 lockdown(s), and the Labour Government’s intention to further increase the minimum wage, double sick leave entitlements, and introduce fair pay agreements, some SMEs (and larger businesses) have been left reeling and wondering how they will meet ever-increasing labour costs – even if they agree with the motives behind the changes. 

A common response to these challenges is moving directly to considering restructures and redundancies, and that may well be necessary, or simply practical, for some businesses.  However, there are other, perhaps less obvious, options that may help a business to mitigate the increasing costs of doing business in a challenging economic environment, without reducing headcount. 

For example:

  1. Working from home:

    For those businesses that can have staff working remotely, this can be an excellent way to reduce sick leave usage, reduce ancillary costs such as leases, car parking, stationery/printing, and tea/coffee. Depending on how much of the team you want working from home, and how often, moving to a hot-desk arrangement (not enough desk space for everyone – which is likely to also force moving to a paper-light system of work), or even moving to a shared office space has the potential to significantly reduce ancillary costs.  On the flip side, worker engagement, interactions levels, productivity and health and safety obligations will all need to be carefully managed.

  2. Hours of work:

    Have you checked in with employees and whether they may enjoy working reduced hours? Could they actually fit their normal duties into fewer hours by being more efficient? Would they be interested in working the same number of hours, but across fewer days?

    Reduced hours can, of course, mean remuneration savings.  Reduced days, if occurring across the business, can also reduce utilities and other ancillary costs.  The point is – is there an opportunity to (reasonably) squeeze more productivity into less time, and achieve cost efficiencies (and possibly happier staff) at the same time?

  3. Ensure all roles are fully utilised:

    Are all of your team operating at full capacity and at their full potential? Is there room to expand the duties/functions of one role, to create room for another to grow into another area?  What about working on projects in teams, rather than retaining set roles and hierarchies?  This new environment allows an opportunity to see how nimble your business can be, and assess whether your structure is as efficient as possible (without necessarily reducing headcount). 

  4. Redefine your working relationships:

    At a time when staffing needs are fluctuating for many, it may pay to reconsider the type of relationship you have with your staff. Will you be needing more casual employees or part-time staff? Perhaps contractor roles would be more suited to your future workflow?  These decisions may help with cashflow by reducing fixed costs, particularly when loans and subsidies are not available, and ultimately help your business remain flexible and resilient.

  5. Technology:

    Now may not be the best time to invest in grand new technology – but it is the time to start thinking about how technology can assist with streamlining costs and efficiencies. Think paper-less or paper-light, tablets instead of pads and pens, filing systems that are electronic only – the paper, printing, storage and stationery savings are, based on anecdotal evidence, significant.  As a bonus, these transformations can also be environmentally friendly – which is good for the world, and increasingly good for business from a consumer perspective.

  6. Measure your metrics:

    Have you taken the chance to look over your recent peak hours/peak traffic/best marketing tools/outcomes, and checked that you are directing the resources you have at those? This can be about rosters, marketing costs, and growing employee skill-sets and focus in areas that are giving your business the best results.

  7. Staying on top of people and performance management:

    Are you letting poor performance slide? It may seem a good idea, if legal fees and risks of personal grievances can be avoided.  But – are you hamstringing the business in the long run?

    What about keeping closer track of performance, moving to performance management or at least informal coaching, when issues first arise. Take the opportunity to help people to grow, rather than implementing processes when frustration levels are high and the relationship is damaged.  Driving high performance, and helping people to meet expectations can increase efficiency, output, and assist with staff retention, if done well.

Of course, what each business can implement, and how, will need to be considered against existing employment agreements, policies, and following appropriate and lawful processes.  But, there are options, and now is as good a time as any (and possibly the best time ever) to brainstorm creative ways to manage the increasing cost of employment, without necessarily reducing the human headcount.  

For more information

We routinely assist our clients in creating nimble business strategies like the above. If you would like to ensure your business is resilient in times of constant change, please get in touch with our employment specialists on 04 472 0020 or 04 495 8920. We can help you explore your options and how to implement them in line with employment law requirements. 


The Future of Employment - JB Morrison Lawyers