5 Reasons to Reconsider Downsizing Your Business

The modern business is one whose eye is ever on the profit margin. This is not a bad thing to consider; cash flow is needed in order to grow. If funds are insufficient to cover the operating costs, naturally the 'Powers That Be' will look to try and recover lost profits from within the organization in an effort to survive and find a way out. Downsizing is usually a consideration, but is it a good one?

Before You Pick Up The Pen For Pink Slips

Is lightening the load on your employment roster really the best way to go? It might seem that way at first. I mean, what company has not at least considered it, if not actually gone through the pains of letting good workers walk out their doors so that they can stay open? Just because everyone is doing it doesn’t mean it’s the best policy in times of turbulence. There are reasons to reconsider the consideration of downsizing.

Here are five:

Most Would Rather Go Without Pay Than A Job If cash flow runs in the red, the assumption is that you need less employees. Of course, workers will want to go on to be somewhere more stable, right? Wrong. The majority of workers would rather be given the option of a furlough, a reduction in pay or even a reduction in hours instead of losing their job completely. Think about it, if you are going to try and run your operation with less staff at 100%, wouldn’t you have more of a chance of keeping up with your own demand if you had the same amount of people with a slight reduction in hours than just less people all together? The Odds Are Against You For Sustainability In an article published by HC Online, a publication dedicated to Human Resources professionals and issues, there seems to be a rather alarming cause and effect to downsizing: “Empirical evidence suggests that downsizing is a risky and dangerous gamble. In fact, less than half of downsized organizations have seen improvements in productivity, efficiency, and profitability following the conduct of downsizing.” If the goal is to grow, then know that the ability to make that happen with less workforce is fairly small. That should make anyone want to think outside the box instead of following along with what everyone else is doing in their industry. Downsizing Announcements Draw Negative Attention To Your Company It is very difficult to positively spin a decision to downsize. No matter how you explain it, what people hear is that you are in trouble. No one likes to hear that people have lost employment and that your business, no matter what the reason, is responsible for it. One must think carefully for other solutions before delving into the dicey world of public relations. Take a solid look at anywhere else to cut costs before releasing valued employees. It Might Be Efficiencies That Need Fixing First The solution of positive income can be very simple. Many businesses make the decision to not invest in newer equipment, most especially information technology-related, when times are lean. The reasoning is that the business can’t sustain the expense of newer machines. This line of thinking can be shortsighted. Dated technology runs slower, is less efficient and usually needs constant repair and updating. These issues over time end up costing the company in productivity and real dollars in dividends; all for saving a few bucks. If purchasing new equipment is too much of a burden, perhaps a leasing option would create more stabilization for your business? There are plenty of options out there if you go in that direction. Consider How A PEO Service Can Save On Employment Costs The rising cost of health care benefits and just plain expense of having employees on your payroll is making most business executives reach for the antacids. This doesn’t need to be the case though. PEO services are a fast, effective and bottom line-saving solution to having to downsize. In times where some organizations feared the worst, a PEO service ended up being a saving grace. In this case, the PEO takes on the burden of your employment costs, along with all of your benefit expenses and passes the savings on to you, minus the headache. If employment costs are the reasons to consider downsizing, take a step back and look into a PEO service instead. Wouldn’t a call to a PEO broker to see what can be salvaged be worth the effort of a phone call? You would be amazed at what you can save and what you can keep on your payroll."