Georgina Guedes

Cut costs, not people

2012-06-28 14:35

Georgina Guedes

On Facebook yesterday, a friend of mine posted an infographic about the absurdities of capitalism. One of the charts showed that while workers produce more than they ever did before, wages remain static. The caption suggested that this was how Wall Street got so rich.

This is naturally based on American statistics but the same can be said, I imagine, for business around the world. Salaries and contract fees have seen negligible growth in recent years, a situation attributed to the global economic crisis.

Friends and family have been asked to tighten their belts, reduce their fees and accept pay cuts – all of which is fair enough if the alternative is no work at all. However, one friend pointed out to me that in the wake of agreeing to a reduced fee for a client, she watched every manner of profligate spending taking place on the production she then bitterly worked on.

The sad truth is that businesses often place a lower value on their people than they do on just about any other area of business. It's easy to enforce a salary freeze, but when cost saving requires some smart thinking or universal belt tightening within the business, it's not even considered.

There is the story of how around 20 years ago, American Airlines saved $40 000 a year by removing one olive from each of the salads it served to its passengers. While $40 000 is hardly a significant amount in today's terms (and probably wasn't then), it does bear testimony to the fact that small cost savings can have a significant impact thanks to economies of scale.

Big businesses spend big money in millions of tiny ways. They provide scalding hot water in their kitchens and bathrooms. They leave the lights on all night long. Their buildings don't allow for the natural flow of air, encouraging the use of expensive air-conditioning units. They provide lavish cocktail snacks that nobody eats at corporate functions.

Conscientious cost saving and the ostentation of minimalism should have become the watchwords of modern business, but instead, the beast trundles on as before, tossing about massive bonuses for executives and keeping the lights on at full wattage, despite all arguments against such behaviour.

The problem with rethinking these kinds of scenarios is that they require behaviour change rather than a simple salary slash or round of retrenchments. Who cares if the tea lady has to empty bins while she does her rounds as long as the CEO can still wash his hands in comfort in the executive loo?

One argument against cutting back in a thousand small ways is that it's difficult to communicate and requires universal co-operation. However, while employees can certainly be inconsiderate about wasting company resources, if confronted and communicated with, they'll generally pull their weight to save money and save their jobs.

It doesn't require a consultant or a poster campaign or a Powerpoint presentation or a roadshow - all it takes is making the decision and then talking about it. Businesses are made out of people, after all.

- Georgina Guedes is a freelance writer. You can follow @georginaguedes on Twitter.

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Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.


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