In response to current financial conditions, companies are evaluating all available options to trim operating costs.  Undoubtedly, salary cost is the biggest line item expense for many firms. 

That said, layoffs are often the method of choice to reduce this significant expense.  However, there are other, more cost-effective ways to reduce labor costs and keep your organization intact.

Let’s take a step back for a moment and take a deep breath. One of the main reasons for considering reducing labor costs is to keep your business going. If this is the case then you should weigh all of your options. I can understand  the justification for considering layoffs if a business is overstaffed, but my experience is that most companies have been running fit and trim with human resources for the past 5 years or more. Human resources are not just a line item in your monthly P&L. Your staff represent a significant investment in the ongoing potential of your company. If you trim even 5% of your staff, that’s a minimum of 5% efficiency and productivity that you have lost. Plus the psychological effect that is passed on to the remaining 95%.

Do the math and see for yourself