From the course: Corporate Finance: Profitability in a Financial Downturn
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Labor force considerations
From the course: Corporate Finance: Profitability in a Financial Downturn
Labor force considerations
- Any company's greatest assets are almost always its people. This is why if you're looking at reducing labor costs to boost profitability, it's important to do so strategically. You shouldn't haphazardly be cutting your labor costs because it could hurt your company's longterm profitability and growth potential. But it's still important to look at those labor costs, because it's one of the biggest categories of spend for most companies. First of all, none of the options when thinking about reducing labor costs are pleasant. You can reduce wages and benefits, you can reduce hours, you can even reduce the size of your staff, but each of these is particularly painful for the workers, for their managers who have to implement the decision, and it can hurt the longterm potential growth of an organization. Being careful about taking each of these steps is the most important thing when thinking about reducing staff costs while…
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