Beyond Pink Slips and Yellow Cards – Intelligent Cost Reduction

I read in the morning newspaper that the pink slip is now a yellow card – the yellow card manifesting itself primarily as across-the-board salary cuts and accelerated consumption of leave.

These measures will only delay the inevitable, if not supported by recession-proof actions.

2009 is going to be a challenge for the auto, metallurgical, engineering, chemical, hospitality, banking, aviation, and BPO sectors. There will be more. These sectors are characterized by an extreme polarity of salaries (read cost-to-company). Our economics of conscience demands that the MD/CEO to shop-floor worker salary ratio should not be greater than 40! I recommend rationalizing salaries as against salary cuts across the board.

But rationalizing salaries is only the urgent-and-important step. We also need to declare war on waste, that is, chronic waste. The cost of chronic waste in any organization is at least 20 per cent of total costs. Try the BestPrax Cost Benchmarking Tool for soul searching. It’s available absolutely free. Use the tool, find your cost of chronic waste, and set a strategic goal to halve the wasteful cost in one year. You could double your profit without any capital investment.

This approach will lead you to breakthrough efficiencies in business processes. It will also push you to think creatively to generate intelligent cost reductions.

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Explore posts in the same categories: 01 Leadership, 05 Cost of Poor Quality, 06 Human Resource Focus, Benchmarking, Business, Management

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2 Comments on “Beyond Pink Slips and Yellow Cards – Intelligent Cost Reduction”

  1. Sudhavenkat Says:

    As a part of cost reduction:

    1:Canteen facilities can be stopped(for this economic downfall period).

    2.poor performing employee can be given memo.

    3.extra unnecessary allowance can be cut for this period

    by all these nearly 20% can be saved or got back.

    thank you


  2. I simply needed to stop and thank you for allowing me
    to You made my day just by on it and which aid me call at what I needed done.


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