Cutting Cost With Smart Strategies -
There are many different jobs that require frequent travel and the company bear all the travel expenses of the employees. Or extravagant expenses made on the perks and benefits that are offered to executives or top level employees. Sometimes they spend a little too much on a few persons and end up making the rest suffer. These expenses reflect on the balances sheet of the company as dropping profits. And when these falling profit figures are highlighted, management goes for different cost cutting strategies.
These cost cutting strategies may include several things like:
Layoffs -
Letting go of members of the workforce who are less productive; the ones who are not being able to make a major contribution towards the company's growth. This bring bad name to the company and the rest don't feel their jobs are secured. Which intern lowers the motivational level of the workers?
Budget cutoffs -
Reducing the marketing and planning budget is one more way of lowering the expenditures. But this method also damages the output and the returns fall further in a long run.
Reducing salaries -
Many companies reduce the salaries of the employees and offer smaller salary packages to the new ones in order to cut the cost. They cut down on sales commissions and other things that add up to the salaries of the employees.
Focus on short-term profitability -
Companies begin to focus on the products or services that offer short term profitability. It is not a bad thing as long as the company is making good money out of it. But this behavior often leads to undermining the importance of bigger long term projects which offer way bigger returns in due time.
Use of credit -
They go for credit instead of paying the vendors in cash. This adds up to the bearing ratio of the company's financials and when they have to pay back to those venders and wish to borrow money from a bank, they might get rejected for their already heavy debt.
Re-think profit margins -
Reduce the profit margins to get more business and starts focusing on quantity instead of quality. This will reduce the number of your repeat customers and make it harder for you to maintain a log tern relationship with your clients.
Instead of doing all that, a company should have their budget controlled from the very beginning and now extravagant expenses should be made. Employs should be sending to corporate rentals around the country instead of booking expensive five start hotel rooms for them. They need to have corporate relationship with vendors to form alliance with them and get the best discount for having these corporate relationships. Corporate rentals have networks nationwide and companies need to make use of these. And should never offer any employee perks and benefits at the cost of making the others suffer.
These cost cutting strategies may include several things like:
Layoffs -
Letting go of members of the workforce who are less productive; the ones who are not being able to make a major contribution towards the company's growth. This bring bad name to the company and the rest don't feel their jobs are secured. Which intern lowers the motivational level of the workers?
Budget cutoffs -
Reducing the marketing and planning budget is one more way of lowering the expenditures. But this method also damages the output and the returns fall further in a long run.
Reducing salaries -
Many companies reduce the salaries of the employees and offer smaller salary packages to the new ones in order to cut the cost. They cut down on sales commissions and other things that add up to the salaries of the employees.
Focus on short-term profitability -
Companies begin to focus on the products or services that offer short term profitability. It is not a bad thing as long as the company is making good money out of it. But this behavior often leads to undermining the importance of bigger long term projects which offer way bigger returns in due time.
Use of credit -
They go for credit instead of paying the vendors in cash. This adds up to the bearing ratio of the company's financials and when they have to pay back to those venders and wish to borrow money from a bank, they might get rejected for their already heavy debt.
Re-think profit margins -
Reduce the profit margins to get more business and starts focusing on quantity instead of quality. This will reduce the number of your repeat customers and make it harder for you to maintain a log tern relationship with your clients.
Instead of doing all that, a company should have their budget controlled from the very beginning and now extravagant expenses should be made. Employs should be sending to corporate rentals around the country instead of booking expensive five start hotel rooms for them. They need to have corporate relationship with vendors to form alliance with them and get the best discount for having these corporate relationships. Corporate rentals have networks nationwide and companies need to make use of these. And should never offer any employee perks and benefits at the cost of making the others suffer.
