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An easy target for cost cutting is staff. Salaries and wages often form a major portion of expenses – because in many cases, staff are the main generators of wealth. (If only we could have the income without the costs, we would make so much profit!). But reducing staff – called downsizing, right-sizing, re-organizing, restructuring – anything but retrenching, seems like a quick win, even though the numbers have a way of creeping back up, ready for another bout of head cutting. Because you still need the people to do the work.
The false promise of cutting staff
The justification for reducing staff is a quaint gardening term of “getting rid of dead wood.” The analogy is to cut dead branches off the tree making way for new growth. The question no one answers is: Who killed the wood? In other words, how did your staff become “dead wood” in the first place?
Dead on arrival: recruitment gone wrong
There are only two possible ways. Either the staff you recruited were dead wood when you selected them, or they came in fresh, and died on your watch.
If it is the first – you seriously need to review your recruitment process, your recruitment staff, and the way you are seen in the employment market. If you have a bad reputation as an employer, you are attracting deadbeats and being forced to employ them for lack of choice.
This is where structured learning – from finance for non-financial managers to budgeting and cost control – can give you stronger managers and better decisions about who to hire and how to support them.
Killing the spark: culture, neglect, and poor leadership
Otherwise, your recruitment is fine. You attract great young people, well trained and highly motivated – just the sort of people you want. And then, pretty soon, through your company culture and persistent neglect, the spark dies.
This can happen through lack of training, absence of management attention, poor and inconsistent leadership or destructive office politics. It can arise through policies that lock people in (like soft loans from banks) so they have to keep their jobs long after they have stopped working – they lose all hope and ambition, all sense of worth, and they value themselves as low as the company values them.
At that point, the HR gardener prunes the “dead wood,” and soon goes about hiring the bright young shoots they hired before – and just as quickly, kills them off.
The smarter alternative: train, respect, and reward
The cost of replacement is always higher than the cost of maintaining staff. Poor company policies, isolated leadership and rigid pay scales, as well as segregating champions and drones, kills productivity.
Train your staff, recognize them all, reward them all and nourish their strengths. Here, practical learning – from business simulation exercises that build teamwork to financial modelling in Excel that sharpens real-world problem solving – creates sustainable performance.
That way the staff will reward the company.
