Cutting Costs or Cutting Numbers ?

More good stuff from ILM this week on managing the activity of cost reduction.  This weeks Edge Online magazine has a good article on the pros and cons of cutting numbers as part of a cost reduction exercise.  The conclusion (perhaps not unsurprisingly) is to keep numbers and ensure that the workforce are fully engaged in and committed to the cost reduction exercise.

To quote the article:

• "Reducing costs through redundancies can be a false economy, according to Colin Barrow, author of Cut Costs, Not Corners. “Research suggests that it’s moderately ineffective and you end up with a demoralised workforce looking for another job,” he says."
• "It is vital for managers to communicate the business case for making cutbacks to staff. “They should also involve employees in identifying and evaluating the options,” Barrow says. He recommends that managers encourage staff to come up with effective cost-saving ideas that can be implemented."
• "Once the cost-saving areas have been identified, the next stage is implementation. This is where leadership and communication skills come to the fore, says Layman. [Alan Leaman, chief executive of the Management Consultancies Association] “It’s about respectful communications, which are absolutely key to implementation of cutting costs. It’s about getting serious buy-in and consent from employees.”

As I discussed in my post yesterday, difficult times call for strong leadership that knows how to get the best out of the workforce.  Don't alienate your workforce....utilise  them !