When the current recession starts tainting your company's bottom line faster than a new red sock in a white wash, what do you do? Cancel the company year-end bash? Drop exhorbitant bonuses and cancel salary increases? Slash advertising budgets? Down production? Or do you just cull your workforce? When one considers that a company's employ looks much like a triangle, with the actual salary structure being an inverted pyramid surperimposed upon its employee structure, one has to wonder whether it really makes sense to deconstruct the building starting with its foundation blocks? Of course this depends entirely on the nature of your business. For carmaker Toyota, which has just posted its first annual loss in its over 70-year history, there is little choice. If people can't afford to buy cars, current production levels just aren't sustainable and manual labourers are going to get the axe. On the other hand, take the already stressed textile industry. There is still basic demand, and cutting labour forces is just going to halve production and double lead times. But then, what happens when the product comes ready-made? Who are the people you are relying on to sell your wares and, not least, get the consumer to come back again? These are the (usually low-paid) people working at the coalface - whether it's the cashiers, customer service reps or call centre staff - these are the people who deal with your customers daily; these are your key representatives and these are the people who could ultimately make or break you. Case in point was US consumer electronics retailer Circuit City, which cut customer service employment, only to have its sales (or rather, the lack thereof) drag the company into a black hole earlier this year. Its competitor, Best Buy, upped its service department and, at last glance, is still flourishing. As Quentin Tannock of consumer complaints site getclosure! similarly pointed out last week, not responding to a customer complaint is just not an option. Especially when there's the new Consumer Protection Act to contend with. But in the end, it's up to you to decide where to cut costs - whether to start trimming off the top, or to just yank out your foundation blocks and hope it doesn't fall around your ears like a child's game of Jenga.


Shan Radcliffe, Retail editor
retailnews@bizcommunity.com
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