I just read an article at Kiplinger that I would like to comment on and share with you. The title is called “What Businesses Are Doing to Cut Costs.”
Kiplinger is simply reporting what businesses have told them what they are doing without commentary. While this is good journalism it makes for unexciting reading for all except those that really care about this stuff.
Many of these things are very agreeable and are things companies should have been doing all along. In good times and bad…
- Curbing travel
- Watching energy expenses
- Repairing rather than replacing
Yet many of these things are disagreeable and can have really bad effects on the overall business…
- Paring Benefits
- Shifting to a commission only sales force
Some of your best employees work for you because you have great benefits, because they can concentrate on what they are best at, and so they don’t have to worry about paying bills when the economy goes down.
These cost cuts I believe will do more harm then good. The companies that keep some of these costs will find themselves able to hire the best employees out there because employees will only stand so long for this form of treatment.
The overall thing I want to emphasive is that cutting material costs is great, cutting human costs is bad!
People are what make your company run, and they are what make your business great.
Human costs should be the last costs to be considered to be cut. There is a certain social contract that needs to be upheld. That is that an employee has a certain expectation that their pay (including benefits) will not go down after they are hired.
A business has a certain expectation that they will only hire employees they can afford, both now and in the future. To hire someone you can’t afford is irresponsible.
Drastic times call for drastic measures, but these are not drastic times, yet…
Yes, some industries are failing and they should fail. The captain should also go down with his ship. But companies that are still relatively healthy should not be cutting pay or laying off people.
I forget where I read the story but I once heard about a company that volunteered to take a pay cut across the board (owner, manager, and employees) so that they could save it. And this was a last resort. And again I emphasive it was voluntary for everyone. This was a decision made by consensus.
If I remember correctly this was some sort of family owned manufactoring operation that employed hundreds of people.
Your employees know where to cut costs. Ask them. They will gladly work harder and make due with less if only you would not ask them to leave or take a pay cut.
This is mainly a message for everyone who is a business owner and/or a manager of a company, but it is also for every employee too.
You as an employee have a certain responsibility in an organization because you are a part of it. You have a responsibility to speak up and shed some light on the truth.
You have a responsibility to tell management ways in which you can cut costs without cutting people. If you don’t know of any right off the bat, start looking. I guarantee people on the front lines can find ways to cut costs.
Lastly, remember that most of this is psychological. We live in a world of plenty where most situations can be made into a win-win for everyone.
Yes, many people in the world are much poorer than us, and we have to remember that. What we fear most now is a decrease in our standard of living. What a terribly selfish thing to be afraid of!
For this very reason I started the value project. So we could all think of ways to add value to the world and to other people’s lives. I personally believe most of us are focusing on the wrong things right now, and as soon as we start focusing on the right things. Well, maybe then we will see a recovery sooner than we think…