In this two-speed economy, job losses in the eastern states are continuing. Industries under pressure, including printers, are letting go of staff. Job cuts are inevitable.
The problem is that cuts to staff return to bite companies when the recovery comes, which it will. Economic cycles are like that. Cutting staff to meet a short-term imperative can result in the loss of important operational knowledge and the cost of rehiring when the economy has turned is much more expensive.
Management consultants say there are alternatives and tend to advise their clients to look at other cost areas to reduce pressures in the short term.
Apart from hiring freezes, the first and easiest arrangement is to put full-time staff on part time. Many large companies, such as KPMG, did that when the global financial crisis hit four years ago, offering staff part-time options to cut costs. Reducing people’s working time by only one or two days a week can produce big savings and also ensures brainpower remains in the organisation. It helps maintain employee morale, which invariably takes a hit when there are redundancies.
Printers can also introduce job sharing where they reduce the number of jobs in an area while retaining full-time coverage. With job sharing, two people work part-time hours in what is effectively one full-time position. Again, this potentially produces savings with little impact on the operation.
Both strategies can produce big savings but there are risks. The most obvious is that the business is reducing productive capacity. Simply put, there is less scope to ensure things are getting done.
Another good strategy is to get employees to take enforced holidays. Many employees build up a backlog of holidays that just sits on the company’s balance sheet. Some companies have made deals where staff members have taken a mix of paid and unpaid leave. If many people took four weeks paid leave and two weeks unpaid, it could create massive savings.
It is also important to ensure employees are working efficiently and to roster for maximum staff efficiency. One of the worst areas for inefficiency is sales. There are many places where salespeople are spending much of their time chasing up unpaid accounts because they have a relationship with the customer instead of getting out there and making money. Chasing payment is a job for administration. Managers need to take temperature tests every month to see how staff and the company are performing.
With the high level of vacancies these days, landlords are more willing to cut deals. Still, any business planning to get a better deal needs to plan it well in advance, at least six months beforehand. It is also recommended to talk to suppliers and to test the market to see if there could be better deals around.
All operational expenditure obviously needs to be reviewed, particularly equipment. Fax machines can be replaced by scanning equipment and accounts receivables can be put on e-payment systems.
Leon Gettler is a senior business journalist who writes for a range of leading newspapers and journals
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