Is it Possible to Cut Costs Without Hurting Employee Morale?

Moving from a physical office to remote work and implementing tech such as AI to free employees from tedious tasks are two possible strategies to consider.

Writing and editing are not fields known for high salaries and lavish perks. While my sister, who works in the liquor industry, was treated to a roundtrip overseas flight in business class (with the flat bed), I have been pressured over the course of my career to choose the cheapest domestic economy flight. That means no flights on non-discount airlines during peak flying times out of in-demand airports.

I always feel lucky to have employment and money coming in, so I can laugh these discomforts off to some extent. However, when I think too much about it, I feel devalued. Is it worth sending that kind of message to an employee to save less than $100?

Dark Side of Cost Cutting

When thinking about cost cutting, I think about the positive impact it can have on an organization’s profitability, but I also think of the dark side of it. That dark side includes executives who were promised startlingly high bonuses to reach specified profit goals and will do nearly anything required to reach those goals—including instituting the kind of cost cutting that creates resentful employees.

Earlier this year, Forbes published a piece by Naz Beheshti on “How to Cut Costs and Prevent Employees from Quiet Quitting.”

A key hazard of cost cuts is precisely what I experienced—it leaves employees feeling they are not appreciated. This can lead to the phenomenon of quiet quitting, in which an employee stays in their job but is disengaged. They stop putting their full effort into their work.

Other company failures Beheshti cites that can lead to quiet quitting include poor management practices, job dissatisfaction, and toxic work culture. You could make the argument that all those worst practices can be the result of poorly handled cost cutting.

Along with cost cutting that necessitates discomforts like the ones I experienced when traveling, or the moving of an office from a prime location to a much less convenient one, cost cutting can keep companies from rewarding stellar performance. Raises and bonuses often are eliminated or significantly cut back, and opportunities for advancement can be curtailed. A company might reason, as I experienced in the past, that it can’t promote an employee because if it promotes them, it will have to pay them more.

Managers in a cost-cutting environment are under heightened pressure and may demand more from their employees in efficiency and work output with fewer colleagues to share the labor.

A toxic work culture can quickly arise in which employees, who already feel underappreciated, are driven to exhaustion and high levels of stress, leading to job dissatisfaction.

All those things, stemming from cost cutting, then lead to a disengaged employee who decides to quietly quit their job.

Cut Costs AND Improve Employee Morale

Fortunately, there are ways to cut costs without negatively impacting corporate culture, Beheshti notes.

For example, rather than moving to cheaper office space in a less desirable location, an organization could give more employees the option for flexible work arrangements and remote work. That allows for a downsized physical office that is still in a great location in which work groups could rotate their presence. In some cases, employees who are almost entirely solitary in their work, could always work remotely, excluding quarterly or yearly in-person meetings.

Another way to cut costs and simultaneously make employees happier is to streamline processes with automation, such as by using artificial intelligence or other technologies that cut back on repetitive, irritating tasks. This frees up the employee to spend more time on more profit-producing work, and the employee is more fulfilled. After all, there’s nothing like being freed from tedious work that takes a person away from tasks that interest them more, and in the process, produce more for their employer. A win-win!

When your organization needs to cut costs, does it strategize ways of doing so without negatively impacting employee morale?