Business
4 Tips to Reduce the Spiralling Cost of Employing Staff in SMEs
Published by Jessica Weisman-Pitts
Posted on August 3, 2022
6 min readLast updated: February 5, 2026
Add as preferred source on Google
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on August 3, 2022
6 min readLast updated: February 5, 2026
Add as preferred source on GoogleBy Stefano Maifreni,Founder & DirectorFounder & Director Eggcelerate
With the cost of living continuing to rise, businesses are looking for ways to reduce their operating costs and increase profitability. Many SMEs have found that they can do this by reducing the cost of employing staff. However, with minimum wages increasing and employee benefits such as holiday pay and pensions set to become even more expensive, this may not be as easy as it sounds. To reduce the cost of employing staff in your business without compromising service standards or quality of work, you’ll need to identify areas where you can save without lowering productivity. This article explores five tips that will enable you to reduce the cost of employing staff in your SME.
Think long-term
One of the ways to save on staff costs is to hire where it is needed.
First comes the company’s strategy: vision, mission, values, objectives, and how you create value for customers. It drives how the organisation works and what skills are needed.
Skills are available either by hiring in permanent positions or flexibly by hiring external professionals who can bring entrepreneurial attitudes and cross-pollination from previous experiences. This approach is valid while designing part of the organisation from scratch, or maybe if there is a temporary need for additional skills.
If an organisation is in place, and the need to change and realign with the strategy arises, the approach is about transformation. CEOs and Founders are usually astonished by most of their people’s adaptability and will for change, although, at times, they have to make difficult choices. Investing in the right people and allowing them to develop skills through cross-functional projects or training is an investment worth doing. It gives flexibility in rearranging the company and realigning it to the new strategy or an uncertain environment.
Conversely, hiring people at the National Living Wage while saving costs in the short term creates an unmotivated, rigid, commoditised workforce: people behave how they are treated.
Streamline your processes
A big part of reducing the cost of employing staff is reducing the number of staff you employ. If you can streamline your processes, you’ll be able to hire less staff (and thus pay less in wages).
However, it’s important to note that cutting staff back will affect your business’s productivity and service delivery. For this reason, it’s essential to identify areas where savings can be made and implement them without compromising on service standards or quality of work.
Automate as much as you can
Outsource as many tasks and processes as you can. It will cut the cost of employing staff and enable you to focus on your core business activities. If you hire someone to handle HR functions, you’ll be able to rely on them to comply with employment law. Similarly, if you outsource your payroll, you’ll free up time to focus on making your business more profitable. You can also automate other business areas, such as marketing and sales, to save time for your core business activities. It will enable you to do more with less, reducing the cost of employing staff.
Consider flexible working arrangements
Remote working, job-sharing and flexible working hours are becoming more popular in the UK for good reasons.
They enable you to hire staff with a broader range of skills and experience than you’d otherwise be able to hire for the same wage.
On the one hand, they are more attractive to younger workers, who are increasingly likely to choose flexible working arrangements.
On the other hand, they will also enable you to hire more experienced staff. For example, you could hire an experienced web developer on a job-sharing basis.
You might be able to hire for specific positions with tailored working hours. For example, if you hire a virtual assistant or someone to handle your marketing, you could offer them the option of working a 9 to 5 workday or when it’s convenient for them, such as in the evenings, at weekends, or from home.
It will enable you to hire staff with a broader range of skills and experience than you’d otherwise be able to hire for the same wage. It’s also a good idea to offer flexible working hours to your existing staff to avoid frictions and misunderstandings.
Conclusion
The tips listed above will enable you to reduce the cost of employing staff and free up cash flow in your business. With this in mind, it’s important to note that hiring an efficient and productive team is the best way to reduce the cost of employing staff.
Easier said than done! I always tell my clients to look at their people not as a mere cost – they are not raw materials: we are talking about people who become the company’s true asset and human capital in a knowledge-based society. Seeing people as input cost (labour) may be misleading and cost itself should only be the last point to consider.
About Author:
Action- and delivery-focused “efficiency geek” with an entrepreneurial spirit, able to link thoughts and actions, can anticipate and manage the tornado caused in operations by a butterfly flapping its wings in sales. Aware of the boundary between disciplined operations and bureaucracy, he can work “one level up and two down” if needed without fear of getting his hands dirty.
He has a background in the ICT industry, where he worked for blue chips and FTSE250 companies. Subsequently, He further developed and diversified his experience working closely with a portfolio of growing companies and start-ups in technology-intensive and innovative sectors, such as IT, Technology Manufacturing, Drones, IoT, AI, GreenTech and Insure/FinTech.
Stefano is the Founder of Eggcelerate. If you are a CEO of a small B2B business experiencing flat- lined results, Eggcelerate’s FlexCOO service will help you achieve focus and sustainable growth and bring your business back on track. He has P&L management, international expansion experience, and international and intercultural expertise in managing, developing and leading cross-functional teams in complex environments. Stefano is an Executive MBA graduate of the London Business School and a published author (Forbes, The Guardian, The Telegraph, and various SME-focused publications) on topics from Strategy to People and Operations.
Home – Strategy Activation for B2B SMEs and Start-Ups (eggcelerate.com)
Minimum wage is the lowest remuneration that employers can legally pay their workers. It is set by law and varies by country and region.
Automation in business refers to the use of technology to perform tasks without human intervention, increasing efficiency and reducing operational costs.
Flexible working arrangements allow employees to have a more adaptable work schedule, including options like remote work, job-sharing, or flexible hours.
Explore more articles in the Business category
