Andrei.Hicks wrote on Jan 11
th, 2011 at 12:30pm:
Dnarever wrote on Jan 11
th, 2011 at 11:33am:
Andrei.Hicks wrote on Jan 11
th, 2011 at 9:52am:
What's the biggest driver in Op Expenses?
Heacount and salaries and wages.
Effectively, if you can drive those downwards, your operation margin improves, you become a more efficient company and you generate greater intrinsic value for shareholders.
No you do not.
Driving down headcount and wages will give you less productivity with an unhappy workforce.
The longer term result is that you lose - people do not forget treatment like this.
That is part of the reason that toe cutter type CEO's last about 6 or 7 years - After they have gutted the company of people skills and loyalty using your type of practice for short term gain they get out before their flawed business model collapses.
No that's fundamentally wrong.
This isn't toe cutting - its what is known as 'effective headcount management' in regard to keeping a lid on operating costs to increase the bottom line.
It's about streamlining goals, getting people to align their goals with the corporate message, streamlining headcount to be more effective and leaner etc
You're not necessarily cutting salaries, you're cutting the headcount and overall salary costs and making it more effective.
This is done by any number of measures - merging roles, re-aligning supply chains, off-shoring etc.
You're too quick to write off good effective techniques in a cynical manner.
Everybody wants the same thing in a company, success, profitability and to make a difference in your industry.
What you say here is fundermentally different to what you had originally posted.
Still looking to reduce numbers very often ends badly irrespective of your intentions. Never seen it work yet.
When you look at most companies which have been downsized you find that they have more people not less, seen it many times.
The new areas expand when they find out what is really required, removed functions are re identified as being necessary only the new team do not have the experience to do the job well.
My Department downsized 12 months ago, the 2 redundant employees were barley out the door when we employed another 5 with an important function still not covered and being outsourced at a considerable cost.
Overall My division went to about 90 people 15 months ago we are now close to 200. We downsized because the financial crisis which had no impact on us gave management a dishonest excuse to do so even though we were at the time opening new products and expanding.
I lost good skilled workers from my department who were basically replaced by incompetant rubbish.