November 4, 2008
Ways to visit the cost of personnel include cutting jobs that don’t contribute to the bottom line and lowering the cost of the remaining work force. Also consider the following strategies:

-Review non-direct employment costs.

If times are tough, there’s no excuse for excessive expenses for travel, entertainment and other special advantages. Another financial drain is from “company cars.” If the expenses are not bona fide business expenses, you need to reconsider. Examine health care, life insurance and related compensation costs. Explore various alternatives including employee contributions, higher deductibles and possibly reducing some benefits.

-Lead by example.

Don’t exempt yourself from cuts. You must participate in any round of cost cutting for a number of reasons. It may not be the case forever, but if you don’t cut now, you may never get to — ever. Equally important is the need for you to show leadership on the issue of belt-tightening.

-Encourage and reassure those who remain.

Be sensitive to the insecurity that remaining employees may feel. With limited personnel resources, it may be difficult to set up face-to-face meetings and communication systems your employees may need. But you need to be aware of what they are feeling and give them a chance to express their thoughts. Do not adopt the attitude that they are lucky to still have their jobs. You all need each other at this time — act like it.

-Be sure of conditions before you increase size of staff again.

If overstaffing has been a problem, don’t fall back into the same pattern. The decision of how deep to cut personnel is tough, and you will probably second-guess yourself several times after initial cuts are complete. You may see a temporary increase in business and begin to believe that you need to start to hire (or re-hire) again, or it may slow a bit more and you feel you should go into another round of cuts. Absent any tangible evidence of change, don’t take any action. As the workload begins to grow again, you must be aware of the pressure everyone may be under to continue to meet deadlines and serve your customers. Ask for input and give serious consideration to the opinions of your staff. Rebuild slowly. Hire part-time workers before going on to rebuild a larger staff. Contract with outside services. The time to begin hiring again is after you have exhausted most other ways of getting the work done. Be sure of your stability before you begin to rebuild.

It is a hard time and a harder process. Be caution but plan well and carry out your plan with confidence. Good luck.

Jimmie Wilkins is the director of the Chemeketa Small Business Development Center. The Small-Business Adviser column is produced by the center and appears each Tuesday. Questions can be faxed to (503) 581-6017, e-mailed to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or phoned in to (503) 399-5088.