Although expense reduction benefits can be achieved without outside assistance, our experience suggests that better results can be realized by using a specialized consultant. The operative word here is “specialized.” In our view you will be better served if you engage a firm that is:

• Singularly focused on expense reduction
• Experienced at the specific spend category level, with specialized resources
• Independent and unbiased, with category specific benchmark data
  
• Mindful of your commitment to quality
• Confident enough to operate on a contingent basis – they don’t get paid unless cost savings are realized

And, determine whether the company you hire is willing to stay on the job to ensure that the expected savings are indeed realized. You need results! Ideas and suggestions are fine, but you should not be left alone to generate, implement, sustain and monitor the savings projected.

By Michael Matalone

As you may be aware, it is of utmost importance to grow your business at a healthy rate which means that you need to keep costs under control. One of the primary problems with reducing the cost of hiring is the difficulty in capturing all of the associated costs that are not obvious. These include the cost of running ads and/or gaining access to the database of various job boards so you can do proactive searches, or the cost of paying a recruiting firm which are all easy to identify.

What is not easily identifiable is the time and costs associated with identifying (searching for resumes) potential candidates, properly screening them, time spent interviewing them, conducting various “tests” on them, on-boarding/training them, and all the other costs associated with ramp up time, as well as lost opportunities during the ramp up time. And finally, when it doesn’t work out with the person you hire, and you have to repeat all of the above to find someone else.

The following are some tips that will help you to reduce your time and cost to hire while simultaneously, hire better people who can help you achieve your growth objectives.

Implement a structured hiring process. When you attempt to hire without a defined process that you and all of your hiring managers are committed too, your time to fill a role may increase which results in costing you more money. These delays can also mean an increase in costly vacant position days (especially in revenue-generating roles). Additionally, being slow to close on candidates who are in high demand may cause you to lose the very best ones which equates to just throwing your money out the window. Stop “winging” it, and/or using the “gut” feel approach. Define a structured hiring process and ensure that all of your hiring managers stick to it. This also applies to applicants. I don’t care if they were referred by your most trusted advisor, every applicant must go through the same process to ensure you minimize your risk in hiring and increase your chances of success.

Ensure a great candidate experience: The talent you want to hire (“A” players) want to work with other “A” players. They are also typically happily employed elsewhere and not looking for a job. You have to motivate them to want to explore your opportunity. Therefore, communicating the opportunity properly is of utmost importance. The lack of a structured hiring process will also negatively impact the candidate experience and may scare away the top talent you want to hire. This leads to low offer acceptance rates as well as tarnish’s your employer brand as they tell others about the bad experience they had. A well-structured and implemented hiring process is critical to hiring top talent!

Clearly define the search criteria: Not doing this properly is like entering a race but not knowing where the finish line is or driving across country without using your GPS or even a map. You’ll eventually get to your destination, but it’s going to take you twice as long and cost you twice as much. The more precise you are about the search criteria for the role, the easier it becomes to find qualified candidates. The mistake almost all companies make with this is spending a lot of time on creating a job description to help accomplish this task. Unfortunately, most job descriptions describe a bunch of tasks and desired behaviors which are pretty useless in finding/sourcing applicants. This also delays the start of your search and extends the time and cost to hire. Defining the search criteria is all about identifying the key words that can be found in a resume or LinkedIn profile. These are based on specific knowledge and skills – not behaviors! There’s a time and place to identify those, but the initial search is not the place!

Don’t waste time interviewing unqualified applicants: Take steps to narrow your applicant pipeline to ensure you and your hiring managers are only spending time with pre-qualified people worthy of your time. Utilize pre-screening questionnaires, personality and skills test to accomplish this. These will help you determine if the candidate possess the required Knowledge, skills and behaviors to be successful in the role.

The HR Director of a community bank in Sonoma Valley CA said that prior to using these pre-screening methods and tools; she would schedule two days at one of their branch locations to interview about 15 teller candidates only to find out that 12 of them weren’t even remotely qualified. Now she only needs to schedule a half day interviewing those 3 that were pre-qualified using these methods.

Structured interview questions: The quality of the question dictates the quality of the response. Realize that candidates want to answer your questions as best they can. However, if you ask a vague question, you will most likely get a vague response. Also, the only way to truly compare candidates is if you ask at least 3 or 4 of the same exact questions to every candidate. Take time to write out well-structured, meaningful interview questions that identify if the candidate possesses the required knowledge and skills to be successful in the role.

Make objective hiring decisions: I don’t care how much you like the candidate, how highly recommended they were, if they have the perfect behaviors, and are a great fit with your company culture – if they can’t do the job, does any of that really matter unless you are able and willing to spend a lot of time training them and can afford the ramp up time. And while you can learn things quickly, it takes about 3 to 5 years to develop the skills on how to apply that knowledge efficiently and effectively to create consistent end results! 

Following the above guidelines will help you make an objective hiring decisions and result in making better hires at a reduced cost and time to fill the role. But even with doing all this you must realize that all hires (and promotions) are a risk. To paraphrase Forest Gump’s momma; people are like a box of chocolate – you never know what you’re gonna get!  Therefore you must do everything possible to minimize your risk and increase your chances of success.

To learn more about the details on this: Download a free e-book:

The Talent Gap: How To Get The Right People in The Right Roles and Sign Up for a Demo of The XP3 Talent System  http://xp3talent.com/

Cost is a phenomenon that needs to be controlled throughout the life of a company. Cost decisions hold a major significance and are usually handled by senior management executives. The financial stance of an organization, whether small or large, has to be managed by keeping in mind the businesses long-term achievable goals. The CEO or CFO is usually responsible for cost controls with the assistance of other high level staff in each department. Businesses should understand that constant investment doesn’t always guarantee you success. You have to budget, plan and analyze the appropriate monetary needs and then invest accordingly.

When competition increases, you have to make sure of your company’s survival by having a competitive edge. Sometimes companies start losing their profits because they are spending profusely throughout and therefore fail to get the desired results. A CEO, who has an unreasonable view of the demands of consumers and his business needs, is the only person who is able to identify the problem standing in their way.  Bloated spending and improper monitoring of expenses can lead to an immediate downfall of the business.  This is why a cost reduction strategy has to be implemented to counter against the drawbacks that are in your path to success.

Here are some reasons why a cost reduction program should be adopted:

• To increase your profits
• To be leaner in your production costs
• To decrease asset waste
• To increase productivity
• To reduce costs on company resources
• To improve your competitiveness in the market

This is sometimes a difficult task to commit to and there are a lot of complexities and a number of staff members that are resistant to this method. In almost all cases, it is more productive if a CEO adopts a Cost Reduction Strategy first. While we do not get involved in labor reductions it maybe one of the first areas to review for job redundancy. That said, an employee reduction can ultimately lead to a feeling of job in-security in the remaining workforce so tread carefully. We have seen where executives have made flawed staff reduction decisions and cut costs in the wrong areas which could also lead to delaying other critical investments and causing an ultimately slow down in revenue generation. Keep in mind that personnel cost reductions are short lived so there is not usually an actual long-term benefit attached to them.

Implementing cost reduction strategies and plans should not be done hastily and you have to set a reasonable time frame for the process. The CEO or CFO need to identify the categories that will provide a dramatic impact when it comes to cost reduction or else it might not produce the desired output. Inventories can often be reduced but if a JIT (Just in Time) approach is engaged as a solution then the company needs to confirm it has reliable relationships with suppliers or your production could be at risk or come to a complete halt.

If your business is failing, not competitive or you would like to be more profitable then cost reduction is a solution that should to be considered. It is helpful to partner with and expert as doing this internally presents a risk which is not always a sensible option!

Subsequently, we understand that each business has different priorities and risks. Our team examines your requirements and ensures your competencies are satisfied before deciding on recommending a solution. We will manage this process for you and 87 percent of the time we can maintain the existing vendor relationship. Contact us to determine if we can be helpful for you to realize the real potential of your company!