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When businesses downsize or look for cost savings the first place they look is their staff. Employees are expensive—you have to pay them a salary, benefits, “house” them for the work day, and give them whatever equipment they need to complete their work. Naturally when it comes to cutting costs, business owners see reducing these “people” costs as a quick way to save money.
Here’s a twist. Before you start thinking about headcount reductions, look to your employees for costs savings by ASKING them for their opinion. I know—it probably isn’t comfortable to admit that you need to save money if the business isn’t doing well. You also have to deal with the mind-racing and jumping to conclusions of inevitable layoffs. There is a lot to manage when you go this route.
As the business owner, you may need to shift from thinking you’re the only one who knows how to run the business, to being open to input from the lowest levels within your organization. When GE went through this process of seeking out cost saving ideas from deep within the organization, a line worker in one of its plants commented that for 25 years GE had his hands, all the while they could have had his brain as well—for nothing. Pretty powerful.
So do yourself (and your company) a favor—ask. Ask your employees how you can save money, how you can improve operations, how to grow the business. Remember those closest to the work know it best. They know a lot more than you give them credit for.
A critical thing with opening yourself up for ideas is also being open to act on them. Here are a couple of ways to encourage ideas:
Share the savings: If employees think that cost savings are going to wind up in your pocket, and yours alone, they’d be less likely to volunteer ideas. Give them a portion of the savings and recognize them in front of your peers or reward the best ideas with dinner for two paid by you.
Have Belly-Flop awards. Every idea you get may not be a good one, so have some fun with it without embarrassing the person who made the suggestion. If you pursue an idea and it doesn’t work out, award it the “Belly-Flop” award and analyze what went wrong, and learn from it. The main point here is you want to reward the risk that person took by suggesting something.
Watch the eye-rolling: You know what I mean, whether literally or figuratively, there is always one or more employees that roll their eyes as you announce your next big initiative or idea. Before you dismiss them as small-minded, take a moment to find out what their qualms are. In their response may be some warning signs of a project about to fail—or cost too much.
So take time in your day, week or month to ask, listen and do. If you show you are open to ideas from the ranks– and take them seriously–more will come, and so will your solution for turning around your business.