From the course: How to Protect Business Profits in a Financial Downturn
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Prioritizing labor decisions
From the course: How to Protect Business Profits in a Financial Downturn
Prioritizing labor decisions
- One of the most difficult cuts for any business to make when thinking about reducing spending is labor costs. There are three different levels where businesses might be reducing their labor costs. And they get increasingly difficult. The first level is reducing overtime and the number of contractors you have. Overtime tends to move with the business cycle. When the economy's good, overtime hours rise, because it's tough to get new people and because you might have more business. But when the economy slows, it's time to cut back those overtime hours. Either because you can hire more people to do the work, or because there's less work to do. When the economy is good, you might hire contractors to augment your workforce, to handle extra work you have. But when the economy slows down and there's a recession, it's very common that the work dries up, too, and so you won't need as many contractors. The second level of cost…
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