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Laying off should be explored after exhausting all options.
Before Layoff following steps can be taken:-
1. Brief/Communicate the staff about the challenging market situation.
2. Encourage the persons to take unpaid leave for some time.
3. Inform the persons to take pay cut incl Senior Management.
4. Utilize this tough period on upskilling,cross skilling and more multitasking.
5. Review/Revisit the purpose of the company and take necessary steps to re-align the goal of company. .
Taking decisions that affect the future of the company, managers are faced with problems of choice. They must seek the data to make the right decision .The work of a management accountant is to assist the Manager establish alternatives and calculate the costs and revenues of each relevant altermnative.
The capital of the company consists of:
- Invoices owed by customers
- Fixed assets
- Inventories
while the bulk of the costs consists of:
- Costs of staff
- Costs of capitaix
- Costs of raw materials
- General costs
So I think that the alternative to lay-off of employees is not the right solution, at least the first alternative. But it is the job of management accountant to do a thorough comparative study of different main categories of costs to determine whether the decision to reduce the staff is the best solution.
However, I think the manager should first focus its study on beforehand:
- Costs of capital
- Costs of raw materials
- General costs
In detail in the use of:
- Pricing
- new products
- The developing investissemnt
- Production volume
- marketing
- communication
- Standstill capital
- pubilicite
Thanks for invitation
I amagreeing with my colleague’s answer Mr. nadjib
Yea, it is one of the option but rather there are several steps have to be taken and most of the steps already mentioned herein, not repeating the same points then.
No. Need to check other departments where financial budgets have high in proportion.
-NO it is not, There are many options for a company not to go with the Laying off , for example let the employees invoved with the situation and give them an options of give a volanteered vacation not less than one week and its optional for all employees,....ets.
No. I would suggest to cut the salary rather than laying of people.
During downturn economy, many companies start with laying off employees for the cut off cost. That is because cost of employees makes the biggest part of the company's expense. The wise company's management is the one who keeps the layoff as the last option for the company to reduce its expenses.
The management should find options other than laying off employees, Reducing other general and administrative cost which includes, real estate rent, vehicles rent, utilities, etc.
If the company utilized all options, and has no choice other than laying off employees, then they should start with option which is less harmful for the employees and the company.
Extra benefits that are given to some employees might be reduced. Vacation tickets and health insurance are also major part of the employees' cost.
Finding ways to reduce training cost, for example the company uses online training instead of regular class room training.
Unpaid vacation is fair option for employee and company if that is the only choice before layoff option. The employee will not consider himself/ herself as unemployed. The company will benefit from reducing the cost and won't have to spend extra money on hiring / training new employee when the economy becomes stable.
The layoff is the last option that the management should consider and if it is forced to do so, it should consider the side effects and the work flow when starting the layoff.
No, downsizing is not a good solution for cost cutting. Downsizing practice may be helpful only when all alternative strategy fail.
IT Should be the last action to be concidered
Not at all, in this circumstances i apply other alternative solutions,like working extra hours etc
