Management Essays on Strategies to reduce employee (labor) cost

Business enterprises, small or large potentially consider employees as burden in respect to cost. However, employees are critical for success of business because they are responsible for production making them a necessity for survival. In most cases, employees may consume small budgets but management must further devise constructive ways of reducing employee costs to improve on profits.

First, businesses should consider reducing or totally avoid overtimes where employees must be compensated. In situations of heavy productions, employees tend to retain employees to continue with work after normal working hours. This considerably increases on overtime payment of bonuses that may not be commensurate to work done during such times. Second, a business organization that operate on peak periods such as clothing stores can rely on temporary employees from agencies. In light of this, an enterprise only pays employees at such times that production is high while saving cost in situations that employees would otherwise remain idle for lack of business activities.

Third, a business organization can streamline operation processes to ensure that there is maximum use of employees commensurate to the work they do. Studies reveal that streamlining processes potentially reduces duplication of work by employees and as a result reduces operation costs (Lewis n.p).  Fourth, enterprises should invest in modern technologies because they can help reduce labor costs. For instance, today, computers have greatly automated processes and activities to an extent of doing tasks traditionally meant for more than 20 people. Lastly, a business can reduce labor costs by streaming hiring policies that ensures that only right individuals are hired. Moreover, once employees are hired, they should be trained to acquire news skills and knowledge to improve on their efficiency.


Reducing labor costs. Adapted from Money Crashers, 2012.


Work Cited

Lewis Michael. How to reduce labor costs in your business. Money Crashers. Money Crashers,

  1. Available at: Accessed February 8, 2018.