Manage the budget and cut expenses while maintaining employee morale

Do review company policies

Many companies have company policies with regard to costs. They could range from the amount an individual is allowed to spend without additional authorization to the policies regarding company credit cards. It is a good idea to review these policies and make sure they still apply. If you are seeing an increase in the amount of discretionary spending, it may be time to lower the amount an individual can spend without additional authorization.

Do ask for employee input

When it comes time to make cuts, the people on the front line are the most knowledgeable about where cuts can and can’t occur. Ask for their input. You could even put a program in place to reward employees that come up with significant cost-saving ideas. Involving employees in department decisions allows them to feel important and have skin in the game. The amount spent on the program will be minimal when compared to the overall savings.

Do look at your own spending

As managers move up through an organization, they have a tendency to expect some benefits with the title. Whether it is a dedicated assistant, company car, or expense account, these benefits cost money and impact the company’s bottom line. Take a look at your expenses and see if there are areas where spending can be reduced. Do you need a dedicated assistant or could you and another manager share one? Can you reduce your expense account? By taking a look at your own spending and making reductions where you can, you are not placing the entire burden solely on your employees. By sharing the burden, you are showing that you and your employees are truly a team

Do take your time

An annual budget isn’t something that should be put together at the last minute. It takes time and effort to create a budget that will allow you and your team to perform effectively, efficiently and at the lowest cost possible. Be prepared for the process by putting together your expenses for the current year as well as any unknown expenses and initiatives for the upcoming year.

Do measure performance

Compare your actual spending to your budget on a monthly basis. By doing so, you will be able to easily identify any areas where you are over-spending and address them before they get too far out of control. You should also communicate these metrics to your employees so that they are aware of how the team is doing.

Do not forget the training

Many times training is one of the areas that is minimized during the budgeting process. However, a well-trained workforce is critical to maintaining your levels of quality and reducing turnover so don’t take it for granted that you can just slash the training budget to get your spending under control.

Do not play favorites

When identifying areas for cost reductions, the team and all of the related costs as a whole should be reviewed equally. Many times a manager has a pet project or program that they are unwilling to even consider for a cost reduction. Each project and program should be evaluated for possible reductions. Not only will this make all of your employees feel equal, but it will make everyone more cost aware when it comes to spending.

Do not remove all the perks

Happy, engaged employees are important to the success of any company. Company perks play an important role in keeping your employees happy and engaged. When you are considering removing employee benefits to reduce costs, you need to also take into account any impact this would have to overall employee morale. A reduction in employee morale can turn into employees leaving the company which may cost you more money than the benefit you reduced.

Do not forget some padding

No one can budget for all costs that may occur during a given year. Equipment may fail, an employee may quit both of which are unforeseen and can have a financial impact. So when putting together your budget it is a good idea to include some additional dollars to handle these unexpected situations. By doing so, you are covered if something occurs, and if not, you can come in under budget.

Do not take it personally

During the budgeting process, there are going to be tough decisions. You are going to win some and lose some so it is important to view all of these decisions as business and not personal. Many times managers are only concerned with their budget as they are developing it for the upcoming year. By changing that mindset and focusing on your actual costs and adherence to your budget on a regular monthly basis, you will be able to quickly address areas where you are over or under spending.