Renaud

It’s an easy one. Want to cut costs? Lay off people or ‘terminate their contract’ (as we say in Romania). Layoffs imply some form of guaranteed salary in North America. Therefore some of Romanian Managers/Owners I know have been terminating contracts. But what do you do when things pick up again?

I read a great article in Wall Street Journal about layoffs but more specifically to trim costs on a broad based manner - ask your Assistant to print it for you. It gives examples of reducing salaries, unpaid vacation and even cutting back on expenses such as travel and mobiles phones. You may very well get more benefits by cutting ‘across the board’ on expenses rather than shedding critical staff. Here are a few examples:

Hewlett-Packard, which was already cutting 24,000 jobs following a big acquisition, cut salaries by 2.5% to 20% and reduced contributions to employee 401(k) plans (i.e. pension plans). Last year, HP asked employees to take unpaid vacation days and extended a planned holiday shutdown to two weeks.

Test-and-measurement equipment maker Agilent Technologies Inc. is taking a similar approach. It subsequently linked a portion of all employees’ base pay to its financial results, so costs fall automatically when profit declines. In December, Agilent trimmed salaries an additional 10% and said it would eliminate 500 full-time positions, freeze hiring, limit travel, cut temporary workers and mandate unpaid vacation.

Last idea: Ask your employees where to cut! You cannot possibly know all areas where fat can be trimmed. Executives at Commercial Vehicle Group in the US asked four employees to devise a plan to save an additional $50,000 USD. The group identified $600,000 in potential savings, including office supplies and cellphones, which it presented to CEO. “They went after everything,” the CEO said.