Practical ways to save money that every business leader needs to know

As a business leader, the need to manage costs while incentivising a high-performing team is always at the top of your list. With rising operational costs and new regulations on the horizon, it’s never been more crucial to look for practical ways to save money, without compromising on quality, employee satisfaction, or growth potential.

People costs are typically the largest expense for any business, whether that is the payroll bill, the cost of onboarding, or the investment in training and retention. The changes announced in October’s Budget will see costs rise and they’re only going to take a bigger bite out of your budget. That’s why it’s so important to look at HR not just as a support function, but as a critical area for cost-saving opportunities. This is exactly what our People Director team is helping businesses tackle across the country: finding practical ways to manage these costs while keeping teams engaged, productive, and ready for the future. Here are some tried-and-tested ways to save money that our team of People Directors are using right now to make a significant difference to businesses across the UK.

Restructure to save money

Restructuring can be a tricky area, but it can also save money if done right by ensuring that you have the right people in the right roles, streamlining processes, and cutting out unnecessary positions. But remember, any changes you make should align with your long-term goals. It’s important to review your organisational structure and consider whether it truly supports your strategic objectives. If not, think about how you can align people and resources more effectively.

A recent success story comes from Shahbaz Idriss, who joined a parts manufacturing business in the West Midlands in late 2023. The company, owned by the Managing Director, was suffering from production arrears exceeding £400,000, quality issues leading to lost business, high staff turnover, and low employee engagement.

Shahbaz quickly identified that the organisation’s structure had outgrown the business needs. She recommended introducing a Plant Manager role to lead operations and implement lean manufacturing principles. This move allowed the Managing Director to free up his time to focus on the vision, strategy and future direction of the business. Within six months, the new Plant Manager successfully reduced the arrears from £400,000 to £70,000. The layout of manufacturing was also redesigned and fully implemented, to maximise floor space and to implement value streams. The Managing Director recently said “… it certainly is [a different business], a complete transformation and great team spirit and atmosphere. Thank you for being the catalyst”.

As a testament to the turnaround, the company has since established a dedicated HR function, having fully appreciated how HR impacts the bottom line.

Streamline recruitment and retention

It’s always more cost-effective to hang on to good employees than constantly hiring new ones, which takes time and money. So consider revising your recruitment and retention tactics. Competitive salaries, professional development opportunities, and clear career paths can help keep your team happy, engaged and reduce costly turnover.

For instance, Sarah Byrom has been working with clients to reduce recruitment expenses through a “get it right first time” approach. By improving recruitment processes, incorporating the company values and setting clear expectations from the start, her clients saved on hiring costs. Additionally, actively focusing on how to keep teams engaged and designing competitive packages helped improve retention rates, saving even more in the long run.

Strategic approach to benefits

Healthcare services for employees are essential, but the cost can add up fast. It is worth shopping around, or even having a conversation with your existing supplier to see whether there is scope to shave a bit off the outlay. One of our People Directors in our North team, Lynn Morrison, saved a client £10k a year by renegotiating their private healthcare service. Instead of paying a deposit upfront, the client shifted to a model where employees paid the deposit and claimed it back through expenses. Same supplier, but a huge saving; proof that you don’t always need to change suppliers to make a difference.

This approach might seem small, but it’s a perfect example of how reviewing your current arrangements can uncover hidden savings.

Cutting legal costs

If you’re ever faced with an employment tribunal, it can be tempting to hire expensive legal support. An experienced People Director can train your HR team to handle basic legal issues which might help you avoid expensive legal fees in the future. Alison Hilton managed to save one of her clients £15k by handling an employment tribunal herself and doing without a solicitor. By careful preparation and a clear strategy, Alison guided her client to avoid hefty legal bills.

Even better than having an experienced person resolve an employee grievance is preventing them from occurring in the first place. As well as being time-consuming and expensive disciplinaries are also stressful and unpleasant. A small investment in training your managers to manage conflict, handle performance issues, and engage with their teams can make a huge difference and save you the headaches of costly legal battles.

Catherine Wood trained managers at one client to improve their leadership skills, which helped the company go from over 20 disciplinaries per year to just two, leading to significant time and cost savings of £11K.

Smart technology and Applicant Tracking tools to save money

If you haven’t yet explored how tech can save you money, now’s the time to start. Look into automation tools or platforms to help simplify your hiring and HR processes that will save you money and effort, while freeing up time for more creative problem solving and improving the candidate experience.

People Director Liz Allan has helped three clients save significant money by implementing an innovative applicant tracking system and recruitment platform. People Puzzles works with a number of applicant tracking systems to improve the candidate experience, from sourcing to offer which streamline hiring process, and integrate with HR Information systems to minimise unconscious bias and encourage diversity. Liz’s clients are now confident direct recruiters with minimal recruitment spend, cutting out inefficiencies while still bringing in the very best talent.

Start saving today

There’s no time like the present to start thinking about how you can save money in your business. Whether it’s reviewing your employee benefits, improving your recruitment process, training managers, or restructuring your company, there are plenty of practical ways to make a difference.

The experts mentioned above have helped businesses just like yours save money and improve their efficiency, and they’re proof that even small changes can make a big impact. By taking a smart, thoughtful approach to saving money, you can keep your business thriving, even in the face of economic uncertainty.

So, what are you waiting for? Start reviewing your processes, implement these practical changes, and set your business up for successful growth.

Webinar on how to cut costs in your business and save money

To hear first hand from our experienced team of people director, join our interactive webinar exploring how business leaders can combat the rising price of employment that includes increases to National Insurance and minimum wage. They will provide practical tips and takeaways for immediate impact on people, price and productivity

Date: Thursday 30th January 2025

Time: 12-1pm