Part 2 of a 2 part series

Warning Signs:

• Rising labor costs as a percent of sales.
• High turnover of employees.
• Evidence of inadequate training.
• Employee/supervisor conflicts
• Increase in employee absenteeism/tardiness.
• Confusion/duplication of effort.
• Signs that a process needs improvement:
  • Falling profits with stable or growing sales, stable prices and costs.
  • Net sales to total assets out of line with industry averages.
  • Unnecessary duplications.
  • Unneeded income
  • Bottlenecks.
  • Missing information.
  • Missing resources.
  • Poor morale.
  • Rejects.
  • Customer complaints.
  • Absenteeism.

Steps to Improve: COST CUTTING

• Eliminate employee overtime.
• Reshuffle staff duties to control costs.
• Shave labor costs with part timers.
• Consider outsourcing positions requiring a few people with high skills.
• Use independent contractors to slash payroll.
• Consider leased employees for seasonal employees and busy periods.
• "Lease" your employees to other businesses.
• Use temps where advantages exist.
• Consider contracting out work; overloads, space/equipment limitations.

Steps to Improve: COST CUTTING IN HARD TIMES

• Downsize in hard times.
• Put a freeze on hiring and routine raises.
• Shift to six-hour work day.