At times, managers face a situation in which cost control extends beyond a few budget items. During an economic downturn or a sustained slide in sales, across-the-board cost cutting may be necessary.
For most companies, labor represents a significant, readily controlled cost. You can control labor costs by not doing certain things. You can not hire new employees, not replace workers who leave (a tactic called attrition), and not approve overtime. You can also reduce employees’ hours or lay off workers.
How layoffs are handled can make the difference between a momentary dip in morale and the devastation of employees’ spirits. Management must communicate honestly with employees and make the case for the layoff. Provided that ...