Staffing is a Huge Expense

Keep Staff Costs Down by looking at these 7 areas

Anyone can reduce labour costs without reducing staff

It is simple just take a look at your people’s

* Fit
* Cost
* Spend

Say What? Aren’t Cost and Spend the Same? Nope, not in this context…

Fit is about the right activities and skills needed in the various parts of your business to make it run efficiently and effectively (and profitably)

Cost is about your commitments; Salaries, wages, and related taxes etc that are your payroll. The stuff that still costs you money whether your staff are on holidays or not.

Spend is about the “discretionary” extras related to having employees. These extras can be quite comprehensive – from the costs of morning tea, to Christmas parties and how fancy is the toilet paper each person is allocated?

So yes, from an accounting point of view Cost and Spend are very similar, but here I have used different words to try and separate the concepts of the money you know you are in for year in year out, and the money that adds to your staff costs (sometimes quite unchecked).
Don’t forget that you are not starting from scratch, it may take a few months to get from where you are to where you need to be – especially if you wait for staff attrition before you adjust your skill sets etc.

7 questions to Reduce Staff Costs

There is no right or wrong here – this process is asking key questions to gain clear information about where salary and non-salary savings can be made and then making informed decisions;

  • Question 1- What jobs/activities does the business require?
  • Question 2 – What Skills does the job require?
  • Question 3 – Can the existing staff do the jobs needed?



  • Question 4 – Is the person being paid the right amount for the job?
  • Question 5 – Are you getting appropriate outputs/activity from each person in the job?


  • Question 6 – How much do you spend on each employee?
  • Question 7 – How much does each employee spend?

Reminder – this process is about ensuring you think about what you want and then gain clear information as to what you have. You can then make make informed decisions about what you want to change. By undertaking this process regularly you will also curb “cost creep” and remain a lean and fit, profitable business.

Do you have any other ways of reducing labour costs? – Feel free to share them in the comments section below….