A slowing economy and tight cash flow might make it tempting to trim benefits and bonuses. But drastic cuts could be penny-wise and pound-foolish.
If the top brass decides you must scale back to save money, make sure you don’t drive your best employees away—at the very time you need them most.
Here are 10 ways you can help soften the blow of reduced benefits and incentives:
1. Cut benefits last. Yanking expensive benefits such as health insurance could devastate employees. Look for ways to bolster productivity in underperforming units before cutting benefits.
2. Cut from the bottom up. Trim benefits with the least impact first. Preserve perks that most in your organization rely on—like health insurance. If you don’t know which benefits are used the most, ask your broker for numbers.
3. Shift costs. Instead of ending a benefit, alter it so it costs less. Dental coverage and life insurance, for example, can become voluntary benefits that you offer at a discount to employees willing to pay their own premiums.
4. Think temporary. Figure out how much money a department needs to make before you reinstate a benefit. Then tell employees so they can reach for that goal. If you cut bonuses, for example, set targets for employees to regain them. It could inspire greater productivity.
5. Beef up training; don’t cut it. In a tough economy, training is often the first thing managers ax. But slow stretches allow time for productivity-boosting staff development. Focus on in-house mentoring and cross-training instead of expensive seminars and conferences.
6. Negotiate better deals. If you have to lower benefits costs by 10% or less, you might not have to cut at all. Instead, ask vendors for better rates. Most will negotiate if they think they might lose your business. Or ask them to restructure your plans so you can offer the most valuable options to the most people.
7. Substitute. If you end one benefit, start another. Let employees earn low-cost perks. Example: Award points to employees who hit their goals, and let them redeem those points for free lunches or extra days off.
8. End entitlements. Pay raises, bonuses and overtime can’t be givens. Tie raises to performance, bonuses to goals and overtime to need. Target top performers for rewards so your stars won’t leave when you need them to help the organization through tough economic times.
9. Double your effort. In good times and bad, employees consistently find greater motivation in recognition and appreciation for a job well-done than they do in money. Can’t give big raises this year? Make your thank-yous that much grander.
10. Manage up. Don’t wait for the CEO to tell HR what to cut. Take the lead. HR knows best which benefits should stay or go.
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- What kind of financial advice does HR offer employees?
- Sniff out suspicious FMLA requests with this 9-step plan
- Planning to outsource? Prepare to document solid reasons
- If you use a job application kiosk, warn applicants that lying is a crime