Protecting Cash Flow Whilst Safeguarding Jobs
The Covid-19 pandemic has introduced untold disruption to the world economy and resulted in at least 25% losses in global stocks and millions of lost jobs.
Country by country there are differences in contending with the pandemic and getting people back to work. At the company level, some have been decimated and some are scrambling to add capacity and hire more employees.
However, an environment of uncertainty still exists, and many questions are yet to be answered.
Have you made redundancies?
Many businesses have had to make rapid decisions about removing expenses from their enterprise, with reducing staff numbers among the most prevalent. Whilst this may seem like a logical way to improve cash flow, there are several inherent risks associated with making redundancies including drastic additional costs in the long run.
To help businesses understand the sometimes unforeseen costs of making redundancies, we’ve put together an editorial which explains the risks of such actions and more importantly, provides effective alternatives which can help to protect cash flow whilst safeguarding jobs.
Download the full editorial today. Below you will find some of the initial insights found in the full editorial along with details of the authors who are both members of our international network.
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“CFOs are unsure what reopening will look like and have little visibility into when revenue will start to normalize. This is driving CFOs to look for the next round of structural cost cuts to preserve cash for the coming months.”
The Hidden Cost of Redundancies
Whilst making redundancies may seem like a straight forward option to protect cash flow in the short term, there are several inherent risks associated with reducing your work force including:
- What vital legacy information and industry knowledge will leave the company with the employee?
- Are team members’ responsibilities and duties well documented?
- How will organizational culture be impacted?
In the longer term, when you start to recruit again you’ll need to consider the cost of job posting, recruiting, training and other activities.
These costs can be staggering, the Harvard Business School estimates that typical mid-level managers require 6.2 months to reach their hiring breakeven point and the Society of HR Management estimates companies spend an average of $4,129 per hire.
Before starting any additional people reduction programs, there are effective alternatives you can use to help improve your company’s working capital and liquidity situation.
Download our full editorial today and begin exploring the alternatives which can help with cash flow and safeguard jobs.
About the Authors
Paul Zaleski, had a 30-year career in accounting, sales, and marketing. He was with the Pylon Tool Corporation in Northbrook, IL, for more than 25 years and was a controller for much of that time. He also led business development efforts in the engineered components market that led to increases in RFQs, customers, and revenue.
João Costa, coordinates a team of high-level consultants, specialized in the management of cost reduction projects and analysis of a wide variety of cost categories. He has more than 30 years of experience in global management, turnarounds, leadership of marketing, franchising and sales teams.