PERSONNEL COSTS OPTIMIZATION AS A FACTOR FOR INCREASING COMPANY’S OPERATING PROFIT

Abstract

The article describes the directions for optimizing enterprise’s personnel costs that will exert a positive influence over the enterprise’s operating profit and increase the share of labor costs in the structure of operating expenses. Moreover, the researchers have presented the methods used to increase personnel productivity and motivation.  In order to strengthen workers’ motivation and raise their productivity the enterprise should increase basic salary, share profit among employees, pay allowances and bonuses, depending on individual performance. It is also worth noting that increasing these costs will only has positive effect if they ensure sufficient increase in enterprise`s income.

The issue of optimizing personnel costs does not concern salary and bonuses, which are the main motivating methods among Ukrainian enterprises. Basing on the experience of foreign companies and scientific researches, the article considers other methods for optimizing the enterprises’ personnel costs. The authors have suggested  reduction of extra-working hours to prevent exhaustion and fatigue, which cause more industrial injures and production defects; increase of vacation length, which increases employee`s work satisfaction; establishment of the rooms where employees can rest, meditate or sleep in order to enhance their work`s satisfaction. In addition, air temperature, lighting, colour and plants in the office can positively affect employee`s productivity.

The implementation of these methods requires additional costs, but if properly applied, they will have a lasting positive impact on employee`s productivity, which will lead to higher revenues and efficient operating costs.