Here’s How To Cut Costs Without Cutting Morale


Sorry, but there is no way around it – businesses have to cut costs. If they don’t, the odds of survival are not high. Considering, that 80% of new companies fail within the first year, you are going to need all the help you can get. But, it isn’t as easy as slashing away and hoping for the best because there is a human element. As soon as employees see cuts, they start to get edgy and this can affect the office’s morale. A healthy working environment is imperative to success, so you have to avoid this at all costs. The question is, how?

Keep Cards Close To Chest

As the boss, the workforce is only privy to information that you choose to release. So, if the office were to figure out that the firm was in the process of cutting costs, it would probably come from the horse’s mouth. With that in mind, think twice before telling anyone about the company’s finances. Instead, involve your trusted managers and come up with a plan to slash costs incrementally so as not to arouse suspicion. A prime example would be to address overheads and eliminate the ones that are unnecessary. That way, you can avoid widespread panic until a later date. Remember that ignorance is bliss in some cases.

Target Information Technology

The wage bill is the easiest and most tempting expense to cut because of the size. Plus, tech and software are cheaper and as productive. The problem with firing employees is the fact that the cat is out of the bag. Once people see their colleagues leaving, they will jump to conclusion and it will be chaotic. The good news is there is no reason to fire anyone if you are willing to cut the waste from the IT department. Can you access information offline? With the Office 365 package from Better Online, you can work from anywhere in the world. Do you have an in-house team? Then outsource it to a third party. There are always ways to make the business leaner.


Last but not least, don’t forget to communicate succinctly and coherently when the truth does come out. Keeping cost cutting measures a secret is a good option, but only if the rumors don’t start to fly. Once the gossip begins, there is no way to maintain the secrecy any longer. Instead, the best option is to tell the truth and explain the situation. However, the good bosses understand that basic facts will not do, so they go one step further and appease people’s fears. For instance, you could say that you are not looking to save money by reducing the labor force. Quite simply, this is their biggest fear and they will want reassurances.

There is no doubt that cutting costs does have a negative effect on employee morale. After all, it is a small leap from cutting costs to losing a job. However, with these tips, it is possible to tackle the issue without losing the trust of the workforce. That is vital because they are the people that will help the business through these tough times.


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