3 Easy Ways to Cut Your Payroll Costs in Just 30 Days

BY Eddy Hood In Profitability On May 15, 2013 With 1 Comment

How many people in your company are picking their noses right now? According to Salary.com‘s Wasting Time at Work Survey, 11% is the correct answer.

If you have 20 people in your company, 2.2 of them are currently looking at cat pictures on Facebook, chatting about last night’s reality television show, or simply picking their noses. 11% of people waste several hours a day at work on unrelated things. As a business owner, this matters to you because…

Let’s pretend for a moment that your average payroll costs for one employee are $60,000 a year. With 20 employees, you’re wasting about $55,287 a year.

That’s almost the entire salary of one staff member! In other words, you could reduce your staff by one and feel no effect - as long as people worked when they were at work. If you did this, you would cut payroll costs by about 5%.

If we’re going to get you to the point of making $250,000 a year or more as the business owner, we need to destroy three evil doers in your business. I'm going to assume they are present in your company since every company is plagued with them.

Evil Doer #1: Poor Psychology = High Payroll Costs


Do you ever feel so overwhelmed by a project that put it off until you are forced to do it? Of course you have, and so have your employees. This is an example of poor psychology and its killing small businesses daily. Let's give you an action item that you can implement right now to fix the psychology in your business.

Action Item: Set up 4 training sessions this month with your staff. Hold the training once a week and teach the following principles:


Week #1 Training - The Zeigarnik Effect: This is that nagging voice inside of your head that won’t leave you alone once you've started something but haven’t finished it. Have you ever noticed that we tend to focus more on what’s left undone vs. what's completed?

The Zeigarnik Effect says that once you've started something, your brain feels compelled to get it done. If you never start, your brain stays dormant. Hold your training this week and teach your staff about the concept. What we are trying to do here is empower your staff with some understanding. When humans get a greater understanding of why they do the things they do, it creates a desire to want to improve.

Action Item: When you notice an employee that’s procrastinating, try this...


Sit down with them for 10 minutes and discuss the project and its task list. Ask them to do one of the tasks while you chat. Once they actually get started, two things will happen:

  1. They'll realize that the project isn’t as daunting as they made it out to be.
  2. They’ll get momentum and the Zeigarnik Effect will kick them in the butt.

Week #2 Training - Eat that Frog: Brain Tracy’s book, Eat that Frog, has always been one of my favorites for time management. If you want your employees to stop beefing up your payroll costs every two weeks, point them to the biggest and hairiest part of the project first. The idea behind Brian's book is that tackling the worst part of a project first is one of the best ways to keep motivation high and hit deadlines.

Humans usually go for the low-hanging fruit when starting a project. If you help them go after the tough stuff first, the rest of the project is a breeze.

Week #3 Training - Chunk it Up: One of my mentors, Anthony Robbins, teaches this concept. It’s the process of breaking a giant obstacle up into smaller obstacles that you can digest. If your employee just can’t seem to get started, chunk up their project for them. If you and your employees can master this one, your payroll costs will decrease dramatically.


Week #4 Training – Review and Celebrate: On the fourth week, get everyone back together and discuss the improvements you’ve seen. Do not focus on negatives. You want to promote great psychology. The more you cheer and celebrate here, the more the brain experiences a feeling success.

So to get rid of poor psychology in your business, make sure to eat frogs, chunk, and deploy some Zeigarnik. Poor psychology is the basis for your high payroll costs. You fix this and you’re miles ahead of most businesses.

Evil Doer #2: Friday’s & Afternoons = High Payroll Costs

So what are you doing this weekend? You probably have something planned, and if we were coworkers, we could sit around and talk about it on the bosses watch. We all love our weekends, but your bank account hates them. Don’t get me wrong. I’m not saying you need to become Scrooge. We just need to have a heart-to-heart discussion about Friday’s and afternoons.

Friday is a good day to build culture. People are usually in higher spirits given the weekend that is on the way. However, Friday’s also a huge time waster.

If we head back to the Salary.com report, you'll see that 43% of employees claim was time on Fridays getting ready for the weekend. They're not concerned about your payroll costs, they're concerned about their date.

Think about all the payroll costs that are adding up! If you compare Fridays to Tuesdays where only 3% of people wasted time, it’s a big area of concern for business owners.

The research also shows that afternoons are far more unproductive than mornings. This isn't a shocker, but we need a solution.

If we’re going to reduce your payroll costs, we need to do something about Friday’s and afternoons.

Solution #1: Incentives for a better weekend

Find a way to build incentive into Fridays that will keep people moving. For example, you could give out a $50 gift card for dinner and movie to the person that has the highest productivity score. That gives them a way to make their weekend that much better. Your job of course is to make this a competition. Really buckle down and measure. Track how productive people are and have a scoreboard if you have to.

Action Item: Carve out $200 a month for employee incentives. Give a $50 give card out once a month for dinner an a movie to your most productive staff member.

Solution #2: Get Some Rhythm for Crying Out Loud

People usually hit a brick wall in the afternoons. Break up the second half of the day with short breaks every 1.5 hours or so.

Hold 10 minute powwows to discuss what’s great about the day. We do this at Ignite Spot and it’s fantastic. I play music really loud, make every one stand up, and we share what’s going well. It gets the blood moving and the brain refocused.

“This is the key to time management – to see the value of every moment.” – Menachem Mendel Schneerson

Help your staff see the value of Friday’s and afternoons.

Evil Doer #3: ASAP = High Payroll Costs

Do you ever say “I’ll get it done ASAP?”

ASAP is the new swear word #@&!*%

If you ever hear it again in your vocabulary or from your staff, shut it down and replace it with a publicly declared deadline. By making a deadline known, others hold you accountable which is a good thing.

When you commit someone to an action and you don’t get a hard deadline, it’s not going to get done. In fact, you’ll have to spend extra time following up, worrying, and finally doing it yourself. Don’t go there. Without deadlines, thinks take three times as long and the payroll costs are unbearable.

Have your staff define out loud and on paper when they are going to get it done. Make sure other people are listening. End of story.

Action Item: Create a swear word jar for the office. Whenever someone says ASAP or commits to doing something without a deadline attached, make them put $1 in the jar. Once you to $100, give it away as a bonus to your top producer.

Let Me Hear From You

How do manage your payroll costs and keep your team productive? I would love to hear your tips. Add a comment to this post and I’ll respond.

Virtual CFO Consult

My name is Eddy Hood. I've coached over 500 businesses on how to become more profitable. I'm the Founder & CEO of Ignite Spot, and I have mad parallel parking skills.

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