In the simplest of terms, companies hire employees during periods of economic growth and let go of employees during recessions. While this is fundamentally accepted, do companies get carried away with hiring and firing decisions? Is laying off employees shortsighted?
Over the past 10-12 years, advanced knowledge of supply chain logistics and the successes of top retail companies--some of which have gone on to fail--have led a number of companies to focus on maximizing efficiency to maximize profit. These companies have looked to meet optimal employment levels to cut costs, avoiding money spent on idle resources. This makes sense to an extent, but a number of companies have reduced employment levels to the bare minimum, running daily business with "skeleton crews"--i.e. the minimum number of employees needed.
Efficiency is important, but an overemphasis on efficiency can be detrimental to a company's long-term health. When company management reduces its staff to the absolute minimum, it assumes constant optimal working conditions and perfect attendance. However, this is not realistic--employees get sick/injured and also need vacation days. Likewise, equipment breaks, competitors offer sales prices, customers have bad customer service experiences--sometimes due to lack of staffing--and so on. In minimizing costs, a company can minimize growth potential.
Take a look at your current company. Compare yourself to other companies inside and outside your industry. Do you have enough employees? Is everyone always working at full capacity? Are breaks aside from a mandatory lunch not given? Are individual employees handling the responsibilities of 3-5 individual employees? Is the company struggling to retain customers/clients?
In today's business world, companies must be prepared for growth. Growth is not always dependent on positive economic conditions. Recessionary conditions force people to be more entrepreneurial, creative, and innovative. Failing to prepare for growth is failing to prepare for success, and failing to prepare is preparing for failure.
There is a fine line between having ideal employment levels and being understaffed. As "Chainsaw" Al Dunlap and other corporate executives have proven over the years, dramatic layoff strategies can alter and boost short-term profits, but the profitability is not sustainable. In a world of supply and demand, companies must be able to meet demand with adequate supply. Having shortages of employees or goods may be less 'costly' than having surpluses, but having surpluses may produce more revenue at lower marginal cost--meaning higher overall profit. Thus, laying off employees can be shortsighted and perfect efficiency is not always the path to success.
Over the past 10-12 years, advanced knowledge of supply chain logistics and the successes of top retail companies--some of which have gone on to fail--have led a number of companies to focus on maximizing efficiency to maximize profit. These companies have looked to meet optimal employment levels to cut costs, avoiding money spent on idle resources. This makes sense to an extent, but a number of companies have reduced employment levels to the bare minimum, running daily business with "skeleton crews"--i.e. the minimum number of employees needed.
Efficiency is important, but an overemphasis on efficiency can be detrimental to a company's long-term health. When company management reduces its staff to the absolute minimum, it assumes constant optimal working conditions and perfect attendance. However, this is not realistic--employees get sick/injured and also need vacation days. Likewise, equipment breaks, competitors offer sales prices, customers have bad customer service experiences--sometimes due to lack of staffing--and so on. In minimizing costs, a company can minimize growth potential.
Take a look at your current company. Compare yourself to other companies inside and outside your industry. Do you have enough employees? Is everyone always working at full capacity? Are breaks aside from a mandatory lunch not given? Are individual employees handling the responsibilities of 3-5 individual employees? Is the company struggling to retain customers/clients?
In today's business world, companies must be prepared for growth. Growth is not always dependent on positive economic conditions. Recessionary conditions force people to be more entrepreneurial, creative, and innovative. Failing to prepare for growth is failing to prepare for success, and failing to prepare is preparing for failure.
There is a fine line between having ideal employment levels and being understaffed. As "Chainsaw" Al Dunlap and other corporate executives have proven over the years, dramatic layoff strategies can alter and boost short-term profits, but the profitability is not sustainable. In a world of supply and demand, companies must be able to meet demand with adequate supply. Having shortages of employees or goods may be less 'costly' than having surpluses, but having surpluses may produce more revenue at lower marginal cost--meaning higher overall profit. Thus, laying off employees can be shortsighted and perfect efficiency is not always the path to success.