How a Personnel Change Can Save Your Company Money

CHANGING PERSONNEL

When a company is in the midst of making changes to its operations, one of the things that they may consider is making a change with its personnel. Many companies often make changes with their staff of employees for a variety of reasons. One of the main reasons why a company will change personnel is to save money. By changing personnel, a company will be in position to either eliminate an ineffective employee, one that is very expensive or to simply have another employee take on added responsibility to cut costs. By making this decision, companies are able to keep their costs low and maximize their profits.

LOWER EMPLOYEE SALARIES

One of the ways in which a company can save money by changing personnel is to lower employee salaries. When changing personnel, a company can take on employees that are not as costly as the previous ones. As a result, they will be able to better manage their payroll budget on a monthly basis. Lowering employee salaries is one of the most effective outcomes when making changes to its staff of employees.

REDUCE TAX LIABILITY

A personnel change can also help a company save money on its tax liabilities. While this may not reduce the income taxes, it will certainly lower the cost of the company payroll taxes. Changing personnel by lowering salaries or eliminating employees will result in tax obligations that are significantly lower. With a lower payroll tax liability, a company will have the opportunity to invest its surplus funds into other things that can help with its future growth.

LOWER BENEFIT COSTS

As well as lowering the payroll tax liabilities with a personnel change, a company can also lower the cost of its benefits as well. Many companies often pay employees certain benefits such as health insurance, dental insurance and a 401K retirement plan. These benefits are often quite costly and as a result, a company will have high employee costs. By making changes to its personnel, it can remove some or most of these benefit payments and keep more of the money they earn.

ELIMINATE COST OF INEFFECTIVE EMPLOYEES

When it comes to personnel changes at a company, one of the most common types is either terminating or laying off workers. An employee that is terminated usually results from poor performance or behavioral issues. A laid off employee is someone who is let go due to budget constraints. In either situation, a company can save a considerable amount of money when it gets rid of employees that are either not performing up to expectations or ones that it no longer needs.

HIRE EMPLOYEES THAT ARE LESS EXPENSIVE

Another common personnel change at companies is one in which it hires more talentpowered employees. When a company is looking to save money, one of the best ways that they can achieve this goal is to hire ones that are less expensive. By hiring employees that will command lower salaries, businesses will be in position to reduce their salary costs and also increase their overall profit margins at the same time.

PROVIDING ADDED RESPONSIBILITY TO CURRENT EMPLOYEES

Anytime a company is looking to make a personnel change to save money, they will also benefit by adding responsibility to current employees. Companies will usually look to assign more tasks to a particular employee in order to get more things completed at the current salary level. For example, a company will ask its administrative assistant to do its bookkeeping and accounting. By adding responsibility to current employees, companies are able to ensure that they don’t spend too much money on their personnel.

CONCLUSION

Running a business will often require making major decisions. One of the decisions that many companies need to make is managing its personnel. Whenever a company is looking to save money, they will often look to make changes with their personnel. By making these personnel changes, companies can lower their costs and make more money by hiring less expensive employees, assign more tasks to other employees and also eliminate employees that are too costly in terms of benefits and payroll taxes.