One of the things that many businesses around the world are notorious for is layoffs of their workers when they have to cut costs. It appears as though the least required asset for these companies is their workers. As brutal as it may sound, many businesses reduce their team sizes to reduce their costs every day. It is quite surprising because there are in fact dozens of different ways for businesses, especially small ones, to cut their costs without sending their employees home. Not to mention, small businesses aren’t in the best position to terminate their employees when they are already struggling with growth and expansion.
Let us first look at the circumstances and reasons why small businesses resort to firing their employees and terminating their contracts.
Reasons Why Businesses Terminate Their Employees
Your Employee’s Performance is below Requirements
The biggest and probably the most valid reason for firing an employee is when they are not able to perform according to the set targets. Despite this being a valid reason, you should always follow the complete procedure and let go of your employee most ethically and professionally possible. Tell them that they also have the right to quit a company when a company does not pay them as promised and vice versa.
Your Employee Isn’t Honest
You have noticed that your employee is not honest. They try to spend time doing nothing behind your back and are interested in things that they should not be concerned with. It is a risk to have such a worker working at the company.
Your Employee Is Having a Hard Time Assimilating
One of the reasons why many employees are not able to give their best is because they can’t fit in the culture of your workplace. It’s either their religious, personal or moral beliefs that don’t let them feel being a part of the team.
Your Employee Doesn’t Care
Believe it or not, some employees don’t care about the rules and regulations of your workplace and being at a professional place. They bully people around them, try to act pretentious, are not punctual and do not pay any attention to the dress code policy.
Your Employees Cost You Too Much
This is quite an oxymoronic situation where the people who bring you business are the ones costing you money. Sometimes, companies become financially weak, and the only way they have to reduce their costs is firing employees. This helps them save money on employee compensation, bonuses, and incentives.
Is Employee Termination the Only Way to Cut Costs?
Not at all! There are many other ways for companies to reduce their costs without letting go of their employees. Here are some.
Negotiations with Vendors and Suppliers
You can look into your current list of suppliers and vendors and look for opportunities to reduce costs. You have to realize that there are group purchasing organizations developed specifically for this purpose. Furthermore, there are online search engines designed specifically for businesses where you can find other businesses that can help you reduce your costs.
Buy in Bulk
One simple way to reduce your costs is to purchase in bulk. Whether you are buying products or subscribing to software or online platform services, bulk purchases will always help you reduce your costs. As a business, you are subscribed to dozens of different online services and buy various items on a monthly or weekly basis. Buy them for several months or a complete year to save your costs.
Reduce Lavish Expenses for Now
It is amazing that businesses offer their employees with refreshments, coffee, and teas for free, but there is a time when you can do this with ease. Until and unless you have reached a point where affording such luxuries do not bother you at all, do not introduce them.
Invest in the Right Technology
Whether you are buying an electric generator for your office, bulbs and lights, ceiling fans, air conditioning units or machinery, you must invest in latest and energy-efficient technology.
Marketing can suck a lot of your capital out of business depending on the type of marketing you are doing. However, it will be rewarding for you if you use analytical data to narrow down only the marketing campaigns that are lucrative for your business. Spend on them and keep away from spending on marketing efforts that have not yielded any good results.
Similarly, you can find many other ways to reduce your costs without sending your employees home.
Risks Associated with Firing Your Employees
While firing your employees should be the last thing on your list of methods to cut costs, you must also know the many risks that come with employee termination. Here are a few.
Sharing of Company Secrets with Competitors
When employees are not happy with your decision of firing them, they may not care about what action you can take against them. They may go for interviews with your competitors and share your trade secrets. This can be a big set-back for you if your competitor decides to take advantage of the situation.
When employees believe they have been fired based on unreasonable grounds, they may try to take you to court. If any wrongful termination is proved, it can be expensive for your company. Always be sure to complete the procedure of termination or make sure the termination is justified.
Attack on Brand Image through Social Media
Today, people have a voice, and some people are ready to listen to their voice. Social networking platforms are great places for employees to discredit your brand and slander your image if they believe they were terminated by you wrongfully.
Bad Performance of Existing Employees
It does not matter how much you care about your employees. They may have a stronger connection among themselves than they have with you. Therefore, when you terminate an employee and cause some dissention among the ranks.
So, it is highly recommended that you consider the many other ways of cutting costs for your small business before choosing to terminate your employees.
Who we are: Funded.com is a platform that is A+ BBB rated over 10+ years. Access our network of Investors, get instantly matched with a Lender, or get a business plan by visiting us Funded.com