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Is Laying Off Employees The Only Measure To Ensure Cost Cutting?

1 Comment March 25, 2009 – 5:27 pm | Permalink |  Print This Post |

Sneh Sharma, Associate Product Marketing Analyst, Jobeehive asked whether laying off employees is the only measure to ensure cost cutting? Should companies not take it as a last resort to ensure trust in their employees? Her claim was substantiated by the layoff reports on www.jobeehive.com, which tracks layoffs across the globe

This is what our members had to say..

Mr. Anil Chiplunkar, Currently heading Infocounselors and ex-Chief Information Officer at Kamat Hotels (India) Limited commented that:

“Yes the companies should look at this option as the last resort. There are ‘N’ numbers of other measures which can be utilized / tried before reaching this option.

Simple options could be reducing expenses on consumables including stationery, printing materials (moving towards paperless office option), reducing expense on electricity, air conditioning, travel etc. The smart-office controllers can be installed to ensure the lights / AC’s are switched on only when there are personnel working in those areas; else it will be in auto-off modes. There are some companies trying out extended weekly-off, mid-week holidays etc., which can be tried by more companies.

When all other options are run-out the companies can still look at pay-reductions rather than just laying off employees. There are only few of the senior management personnel affected by these lay-offs, mostly personnel below this level are the prime victims.

Thank you for putting this thought on discussion forum. I hope there would be ‘decision makers’ participating in this discussion can get some new ideas to achieve the ‘cost cutting’ rather than the ‘lay-off’ options”

Mr. Lakshminadh Javvadi, Practice Manager at EDS commented that:

“I also agree that Layoff’s are not only the solution in financial crisis. But in Indian IT scenario most of the Indian IT companies are keeping 10-15% buffer resources for future projects. if projects don’t turn up then that will have a huge impact on the small & medium companies. At the same time Good profit making companies are also taking the advantage of the market condition and trying to get rid of non performing employees and cutting their salaries.
I think there should be a balance in cutting down the employee cost and reducing the operational costs. I disagree with Anil that layoff’s are only for working level personnel. I know that even senior management personnel are affected”

Mr. Harish Aggarwal, Business Analyst at Mindsight Consulting commented that:

“I personally feel layoff should not be the only measure to cost cutting. But it is the right time judge one’s capabilities. Company just cant give pink slip on the excuse of cost cutting. Yeah, infact company should do each & everything (even motivate their employee) to reduce the cost as much as one can and assessing the employee’s SWOT. Now the employee who is perfect in his domain, should be remain else out. This should be applicable to every employee be it CMD or mere office boy. If he/she is not adding any economic value to the company or just making them sustain should go first, given the option of salary reduction or efficiency improving period.

Company should now think rationally. And I dont think nobody would mind cut down their salaries and perks rather than simply lay-off. Lay-off gives a measure blow to one’s self esteem & confidence”

Mr. Samarendra Nath Roy, Senior Consultant At Kaizen Institute commented that:

“Firstly I personally feel that layoff should not be the only measure for cost cutting. Best way to tackle this is to prepare pie chart & paretto diagram on Variable cost & Fixed cost of Dept wise in a company. From these charts it will become clear to the management where cost is high e.g. Energy cost is found high, so company wide energy saving drive can be done & all employees participation can be used.
Also it is difficult to get good employees back once a company laysoff. So a company can use its employees for doing miscellaneous jobs which were sub contracted earlier or all outsourcing jobs.
Retaining good employees goes a long way in building an excellent company. e.g. Tata’s , Toyota are some examples of such companies”

Gajanan Bochare Consultant at Mott MacDonald commented

In my opinion when we focus towards cost cutting then obviously we will be working backwards from the real objective of business that is increase in the value of the business, rather during the recession all should focus towards generating more value from the same resource.

The nature of the industry also matters a lot, as most of the IT companies believe in bench strength and hence the managers starts to panic once the cash flow saturates or start diminishing.

There exists opportunities in all times and all the managers should focus on capability enhancement and generating more n more demand.The cost which company believe that they have saved will be very less compared to acquiring the same talent during boom period. This is time when you can show your employees that you care and this gesture will not only motivate them but they will feel that the organisation believes in them and this will help organisation in good time.

Nikhil Datar, Global Head – Business Intelligence at a Consulting Company commented that

I feel that layoff actually is not required even as a last resort if it had not been for “Business” used as an investment instrument in the open market. Think about the rationale this way – If the Board members and leadership were not measured on pre-committed quarterly margins and returns to investors, they would have the time to do some long term planning and avoid such short term fixes. Outmanaging non-performers is a continuous process and not a one time knee jerk reaction. So, layoff is also a reflection of how managers at large are under equipped to manage and grow their teams/ employees. There are many alternatives to managing a tough market and the first and foremost is axing the politics and silos at all levels. That itself can bring in huge efficiencies in the system. It requires a Visionary leadership to navigate tough times

Following discussion has been picked from our Linkedin Group.

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