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10 Jun 2014

Lowering Staff Cost by Increasing Cost

It sounds funny, right?  How can we lower staff cost by increasing staff cost?  As we know, staff cost is computed this way: Staff Remuneration/Staff Output.  So if you increase staff remuneration and get a higher output, your staff cost will decrease.  Other than this, there are 4 other ways that you too can increase cost and lower your staff cost as a result:
  1. Increase training cost.  With better trained staff, their output will increase automatically.  Make sure that you send your staff for training that cost less than $200 per head (for half day).  Most importantly, ensure that the training covers practical issues and not just some impressive theories. With PIC covering at least 60% of your training cost, your net cost is only $80 per head, and I'm sure your company can recover it easily in just 2 days.  To find out the 7 ways to train your staff, click here.  Read here to discover the 9 things that a good sales training should cover. 
  2. Increase the equipment cost.  Like investing in faster computers, you not only get PIC 60% cash funding, staff productivity also increase. 
  3. Increase management or supervision cost, like getting more steps to check your staff work.  With more checks, staff productivity will increase.  This method is not recommended as it reduces your staff to mere robots and does not encourage them to check their own work.
  4. Increase the staff salary across the board and hope that their productivity will increase.  Studies show that productivity will increase for the first 3 months and start to taper off from the 7th month onwards.  This is because money only motivates for a short while and you need to get into the inner self if you want sustainable motivation. 
By Andy Ng, creator of the popular course that is now into its 8th year: How to Be a Better Manager.  For those that prefer a shorter 1-day version, come for Becoming an Effective Manager and Leader.  Click here for list of courses.   Related articles:

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