Workers Laid-Off, Retrenchment Another Big Thing

Is there an alternative to handle the economic crisis instead of relying solely on Retrenchment and laying off of employees and workers?

Many listed companies from all over the countries have been laying off their employees and workers over the past six months, after the major economic crisis has announced of itself. Many employees from SMEs to the Big Listed Companies have experienced retrenchments as their firms decides to downsize their various departments, merge two or more departments into one, or even to make do without one or two departments.

However, other than the common retrenchment exercise, is there any other approach to the matter?

There are many small ways that create a dynamic impact on the firms in cost-cutting strategy. One evening, I happen to meet up with my ex-colleagues from my internship company for dinner, and we were chatting on this very topic over coffee. I asked them how has the company handled the economic crisis when none of the common strategies of pay-cut, retrenchment, laying off workers have taken place.

She mentioned that the company has reduced each employee's amount of annual leaves. A worker's average pay a day is estimated to be around $56. If one day leave is removed from this employee, the company would not be paying $56 for a non-working day and a no-productivity day. By cutting 2 days from the annual leave, it would be $112 that would be saved. The entire company on the average should contain around 250 employees. Ceteris paribus, assuming all workers have the same pay of $56 per day, the company could have saved $28000 in a year. On the flip side, with a reduction in annual leaves, it also bring about higher productivity, because the workers would be present and would also be contributing to more than what he/she has been.

The other mentioned strategy was the removal of meal coupon priviledges. The company now employ bulk catering services which operates on the just-in-time approach. This catering services allows employees to order meals on the very day for those who desires the services, and hence prevents losses on those who are absent or decides to eat out. Meal coupons amount to $1.50 per day, which means the company could have spent to $360 per year for each worker. On the estimate of 250 workers in the company, it would have spent close to $90000 on employees meal coupons benefits, which now could be saved when the scheme has been removed. Catering services are drawn from the employees on wages, which has no further incremental cost on the company.

Thereby, the company managed to tide over the economic crisis in the meanwhile with their ability to identify the major causes for cost. Hence, the major cost driver for the overheads of employee benefits would be reduced in great amounts.