How To Cut Staff Costs Without Firing People

When your business is in financial trouble, finding ways to cut costs is your first priority.

If you carry on spending at the same rate that you are right now, you’re not going to keep your head above water for very long and you’ll end up having to shut the business down.

There are all sorts of different ways that you can cut your spending by improving efficiency around the business, but the quickest way to save yourself a lot of money is to lose some of your employees.

Getting rid of a few people might be enough to sort your financial situation out, but it’s not quite as simple as that.

When you get rid of an employee, you’re not just saving yourself money. You’re also losing years of experience and expertise. You should be able to shuffle things around and get your other employees to cover the workload, but they’re not going to fill that role as well as an employee that has been doing it for years.

That’s a big problem for you because it means that your business is going to take a productivity hit. It’s important to remember that, while cost-cutting is important, you need to also increase revenue to get out of a bad financial situation and getting rid of your best employees is going to make that a lot harder.

So, what are you supposed to do? Well, you can actually cut staff costs without having to get rid of people completely so you can have the best of both worlds. Here are the best ways to cut staff costs without sacking people.

Reduce Hours

If you were to ask most people how effectively they work, they would tell you that they’re not going flat out the entire time that they’re at work.

A lot of people could still complete the same amount of work in a shorter time, so there may be ways that you can cut hours down. Most people would rather see a reduction in hours than not work at all, however, it’s important to remember that some employees might start looking for other jobs.

The best thing to do is to review all of your employees and see what their workload is. Speak to them about whether they could realistically lose a few hours a week and still get everything done, if the answer is yes, you can reduce their hours and save you a bit of money.

When you’re trying to cut down on people’s hours, technology is your best tool. If you can find ways to implement new technology that makes your employees more efficient, they can complete all of their work in a shorter amount of time and you can cut their hours easily.

Schedule Better

If you aren’t scheduling properly, you might be wasting a lot of money on staff costs. For example, if you have a very busy period during the latter half of the week but Monday to Wednesday is quiet, you should factor that into your staff scheduling.

If you’ve got the same number of staff members working every day, people are going to be rushed off their feet during the busy times and then sat around doing nothing when it’s quiet. If you’re struggling with your scheduling, you should look into using scheduling software (like this one at to help you manage it.

If you can make more efficient schedules so you’re only paying employees that actually need to be there, you can save yourself quite a lot of money.

Enforce Annual Leave

A lot of employees prefer to save up their annual leave rather than taking it, which might be costing you more money. But if you can change your annual leave policies and enforce it so people need to take time off, you can save a bit of money on staff costs. You’ll have to offer them a mixture of paid and unpaid leave to sell your employees on the idea, otherwise, you’re going to get a lot of people leaving.

Enforcing annual leave is great for saving money on staff costs, but it’s great for productivity as well. When people are well rested and they’re taking more time off, they’ll be more productive at work, which means that you’ll be more likely to increase revenue and dig yourself out of this financial holes.

Reduce Wages

This isn’t a decision that anybody wants to make but when you’re in a tricky financial situation, you might not have any other choice. One of the best ways to attract the best talent to your company is to simply offer a competitive salary.

That’s fine when you’ve got the money to do that, but now that you’re in a difficult financial situation, you may have to have a rethink. You do need to be aware though, that there are some legal issues around reducing wages that you need to be aware of ( has a great guide on these laws).

Communication is absolutely key if you’re going to start reducing wages. Speak to your employees and explain the situation to them so they understand why you need to drop their wages. You should also make it clear that you’ll be able to start paying them more once the business is back on. If they’re invested in the company and you treat them well as an employee, they may be willing to make that sacrifice for the future of the company.

If you offer your employees benefits like health insurance or a company car, that might be a better place to start. It’s still going to impact them if you take away those benefits but it won’t damage their finances as much as reducing their wages. Again, it’s important that you explain the reasoning for taking away those benefits so they understand that it’s not a reflection on their work, it’s just financial necessity.


In some cases, making these changes still might not save you enough money to keep your business afloat and you might be forced to let people go. It’s not an ideal situation but sometimes it means the difference between closing the business or keeping it open.

But if you’re going to lose a good employee, that means you’re going to have a big skills gap in your business and you need to fill it, otherwise, productivity is going to take a big hit. In some cases, you might be able to get other existing employees with a smaller workload to take on some of those duties, but that isn’t always possible.

If you’re struggling to fill that skills gap, you should consider outsourcing certain areas of your business. Paying an outside company to cover those duties is still going to cost your money but it’s usually going to cost you less than paying the full salary of a member of staff. For example, if you’re paying a full-time accountant, you can’t just get rid of them and start handling it for yourself. But you can save money if you get rid of them and outsource to an accountancy firm instead.

However, it’s worth considering which areas of your company you are going to outsource because some things are better handled in-house.
For example, sales are such an important part of your business operations and you need to have complete control over it, so it’s not a good idea to let an outside company handle it.
Nobody ever wants to be in a position where they have to consider getting rid of staff but sometimes, it happens.

But losing a staff member can have a negative impact on your business and put you in a worse financial position regardless of the money that you’ve saved by getting rid of them. That’s why it’s important that you try to find other ways to cut staff costs first.