At the first signs of trouble in businesses, be it recession, industry downturn or alike – people are always, curiously, the first to go.

When business gets tough, people get sacked. Call it what you will, retrenchment, lay-off, either way, companies are very quick to dump people ‘assets’. It’s usually the ‘quickest obvious fix’ to the need for cost-cutting. The problem is real ramifications these people-less jobs leave behind.

You cut people – their work gets loaded onto someone else’s overfull schedule. Add this to the stress of layoffs / retrenchments happening around you and you’ve got a truly demotivated employee.

When the market turns and you need to refill your desks – the cost of hiring is often exorbitant. With recruiters fees and the demand for higher entry point salaries than the previous employees – the sunk costs are huge.

On the flip side to this we are seeing a lot of cases where companies aren’t so quick to pull the eject cord on their people. More and more businesses are actually turning to their employees for cost-cutting help, with astounding results. The folk at the top are becoming increasingly cognisant of the fact that it’s the guys on all the other rungs who are using the printers, making the orders and seeing where processes are proving to be vastly ineffective. This gives them  invaluable insight into where the money goes, where it is well spent and where it is being hemorrhaged. More and more businesses are enlisting the help of their employees in cost-cutting, rather than cutting employees themselves.

Capitalising on the integrity of your people in times of cost-cutting can seriously pay off as we can see in this Harvard Business Review article about Banner Health who succeed in capturing  upwards of $70 million in saving across their various business between 2012 and mid 2013 – because they engaged their employees in the process.

When you cut employees you save a ‘quick-buck’. but when you get your employees to help with cost-cutting – you save a lot more than just money.

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