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Cost cutting - Fueling the 'GREAT RECESSION'

Is your organisation acting like a scrooge and cutting costs? Is it limiting wage hikes and taking away perks? Is it introducing measures to save a penny here and a penny there in the bills? If that is the case, your organisation may be one of those contributing to the continuation of the 'Great Recession'.

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Cost cutting - Fueling the 'GREAT RECESSION'

  1. 1. COST CUTTING - FUELLING THE 'GREAT RECESSION' By M S Ahluwalia Is your organisation acting like a scrooge and cutting costs? Is it limiting wage hikes and taking away perks? Is it introducing measures to save a penny here and a penny there in the bills? If the answer is yes, your organisation may be contributing to the continuation of the 'Great Recession'. Sometime in the year 2008, the global economy went into a recession like one that the world had never seen before. Yes, the Great Depression of the 30s was 'great' but it wasn't global, the impact was limited to Europe and to some extent to the Americas. What happened this time was truly global. Some of the leading investment banks of the western world had to be sold off. The governments had to step in to protect the leading financial organisations of their countries using the taxpayers' money. There were widespread layoffs across the world. There was a global recruitment freeze and even MBAs from the top business schools could not get jobs matching their profiles.
  2. 2. Sirf Business© M S Ahluwalia Page2 What was the reason behind all this? The narratives of Experts focussed on several different reasons - trade imbalances, debt bubbles, faulty monetary policies, high private debt levels, ineffective or inappropriate regulations, reckless use of derivatives, run on the shadow banking system etc. But if you look slightly deeper into the aforementioned reasons you would realise that the cause could be summed up in one word: GREED The line between 'aspiration' and 'greed' is very thin. People often say that they do not realise when their aspirations turn into greed. But it is not so. In fact, it is quite simple to differentiate between the two and the difference can be stated in just one sentence: "WHEN YOU STOP THINKING ABOUT THE PROS/CONS OF THE DECISIONS YOU ARE TAKING, NOT CONSIDERING THE EFFECT OF THE DECISIONS ON OTHERS, NOT LOOKING AT THE SUSTAINABILITY OF THE DESIRED OUTCOME AND YOU ARE JUST WEIGHING THE IMMEDIATE PAYOFFS, YOUR MOTIVATION IS GREED AND NOT ASPIRATION." And this definition would make it clear to anyone that decisions motivated by greed may lead to short-term gain for the concerned person but would eventually lead to loss for the person, those around and, sometimes, way beyond.
  3. 3. Sirf Business© M S Ahluwalia Page3 If we were to believe the politicians, corporates, news channels and industry analysts the worst is over. And that very soon everything will be as rosy as it once was. It’s a lie. Just look around you. The greed is still there. The greed to maintain ‘profits’ and ‘growth rates’. Profits in monetary terms not human. Growth rates of profits and revenues not of human well- being. And this greed is what has been preventing the world from coming to a 'normal' state for so many years now. Anyone who has ever done financial analysis would accept that having a growth rate of 100% is a great thing for an established company even though it may not even be satisfactory for a start-up. That is why Apple's performance is considered legendary. But the companies even with the huge size that they already have are greedy and want to maintain that same rate of growth and expansion in a global market that is almost saturated and will be until new markets like Africas are opened up. Look at the unsaid agendas of the top organisations globally and you will find something about cost-cutting. And cost-cutting not by improving processes and reducing inefficiencies but by increasing productivity (by increasing work hours), by reducing salaries (increase in salaries lesser than the inflation rate of the country) and by taking away perks. Companies are moving offices to 'almost urban' areas forcing employees to either relocate or bear the increase in travelling time. All of the above is leading to an employee who has a difficult lifestyle to cope up with and a lesser credit to the salary account every month. Which means the employee: 1) has lesser time to spend what he earns, and, 2) has lesser money to spend.
  4. 4. Sirf Business© M S Ahluwalia Page4 And, this is bad news, for the employer, and for other companies. After all, this employee is an average person - a customer and/or a consumer – of the very same company and others too. And, every time this customer does not buy, some company somewhere loses a sale, which results in decreased profitability. This results in further cost-cutting/wage cut leading to further reduction in sales. It is a vicious circle which foolish, short-sighted 'leaders' are leading their organisations into. As this reduction in sales will mean reduced profits and growth rates for the companies, hence reduced GDP growth rates for the country and a continuation of the 'Great Recession'. So, do share this article with your colleagues and employers to let them know who is fuelling the 'Great Recession' so that next time they do not limit your raise due to it or due to the company not meeting its targets. Disclaimer: This article reflects the views of the author formed from general readings and living in the times the aforementioned happened. It does not in any way reflect the views of the organisation (a management consulting player) the author is or has been associated with and is not based on any research conducted/work done by the said organisations. All information stated in the article has been picked from general internet sources such as Wikipedia and the author does not take the responsibility for any factual errors in the information. Last edited October 22, 2015.
  5. 5. Sirf Business© M S Ahluwalia Page5 s Visit our Knowledge Center for more: CLICK HERE To know more about the author visit: Estudiante De La Vida. http://MSAhluwalia.blogspot.com

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  • msahluwalia

    Oct. 22, 2015

Is your organisation acting like a scrooge and cutting costs? Is it limiting wage hikes and taking away perks? Is it introducing measures to save a penny here and a penny there in the bills? If that is the case, your organisation may be one of those contributing to the continuation of the 'Great Recession'.

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