How to Cut Costs to Avoid Cutting Jobs, Essay Example

It is beyond any reasonable doubts that the recent economy is affecting companies and businesses greatly. All across the board are feeling the pinch of the economic recession. It was never anticipated to happen, but the actual crisis in the American economy since the great depression has obligated managers of companies in general to devise new strategies of management to deal with the crisis. Depending on the company’s financial situation and management style, layoffs have become inevitable but there is a lenient option. Companies (employers) can actually cut costs and avoid lay-offs! This paper presents crucial ideas in which companies might incorporate to cut costs and still maintain its employees. It is presumed that the ideas are valuable blue prints for any company’s management team to consider when faced by such a situation.

Employees are an important asset in any organization and a blanket job cut comes with its own set of problems. The remaining employees might loose their morale to work while on the other hand the organization might loose some valuable employees. To avoid this, the management should consider the following options before turning to lay-offs. First, it is good to involve everyone in sharing the cost-cutting pain. The management can explain clearly to its staff on the crisis and brainstorm democratic ideas with them. It is not surprising that some employees may offer to take pay cuts; drop down recently awarded raises; voluntarily accept incentive programs like early retirement and reduction in working hours; or agree to share jobs. Second, the management should consider firing unworthy customers. Third, it is good to reconsider withholding the production of costly products. They can do this by evaluating the products revenue with its associated costs. The production of those with low marginal profits should be withheld for sometime. Fourth, the management should consider renegotiating the organization’s contracts with vendors and suppliers. The negotiation should be aimed at lowering the existing contract pay and making more effective. Fifth, managers can go for the option of utilizing cheaper technology such as storing data on remote servers and utilizing free software from the internet. Lastly though not the least, the management should consider temporarily lifting some of the organization’s expenses such as paid holidays, social functions and costly perks.

Cutting costs to avoid employee lay-offs is not an impossible idea. Although an organization might be undergoing some difficult periods, the management should try and make employees feel involved while maintaining their commitment and trust during tough times. Their ideas might contribute positively in the decision making process. Managers should also try adopting some measures that might reduce the organization’s unnecessary expenses. The overall benefit of such measures is that the organization will end up maintaining its resourceful work force on board during the hard time and employees will be ready to move the company forward.