Tips for Saving Money: Here are some ideas that companies can implement to reduce expenses, especially in tough economic times:
- Use free open-source software wherever possible.
- Audit expense reports.
- Use procurement specialists and take every opportunity to pool your purchasing power with other firms or groups.
- Don't buy new when you can buy used.
- Lead by example in cutting your own costs.
- Sign the checks yourself, if company rules permit, to keep a close eye on payments.
- Seek early payment discounts from vendors.
- Monitor absenteeism. It hurts productivity and overburdens the employees who do show up.
- Use online auctions to cut costs of both goods and services.
- Know exactly what everyone does. No one admits to being underworked or inessential, or to cutting corners.
- Take at hard look at travel. Much is wasteful.
- Shrink or close fixed work locations through telecommuting and outsourcing.
Source: "The Entrepreneur" column by Luke Johnson, Financial Times, 7/21/2010 ("My tips for saving money in tough times").
While aimed primarily at the CEOs of small firms, Johnson's suggestions are equally valuable for controllers and other managers in all companies, regardless of size. Additionally, a potential means for reducing information technology costs may be to utilize cloud computing.
Longer-Term Savings: High employee turnover results in productivity losses and higher training costs. While the exact economic impact on a firm often is difficult to quantify precisely, it is important to attempt measurement, and to look for means to increase employee satisfaction and loyalty, especially among top performers. Studies indicate that employees in their 20s tend to have turnover rates roughly double that of older workers.
A major cause of dissatisfaction among younger employees is the pace of their careers, which can be slowed by the bulge of baby boomers in more senior positions. The Aetna Insurance Company, for example, recently calculated a 12% turnover rate among employees under age 30, twice the rate for older employees. Aetna has estimated that reducing turnover by just one percentage point among just its younger employees can yield significant annual savings: $600,000 from a combination of higher productivity and lower training expenses. Aetna has responded, in part, by aggressive implementation of mentoring programs, pairing small groups of young employees with senior executives. (Source: "Talent Search," Forbes magazine, 3/1/2010.)