[Business] Cost cutting starts from you?

[Jarlaxle]

i find it puzzling that employees are always the first cost to cut in most organisation restructuring.
often, staff cost is not a large cost components.

lately, i know a customer's company had a cost cutting implementation.
my client got 300m+ revenue a yr. the cost cutting implementation is get all the employees to take 10 days of no pay leave.

apparently, the cost cutting measure saved the coy about 1m for that month.

i find it damn hilarious. for a company which has a revenue of 300m. why are they concern with saving 1m?
1 million is a lot for most of us but definitely not for a company with 300m turnover.

then it got me to think, what exactly is main operating cost and their staff cost relative to revenue?
10 working days = 1m
20 working days = 2m = 1 month
12 month = 12 X 2 = 24m

24m/300m = 8%!
if i include director fees, top mgmt bonuses, etc. at most 10% also.
without knowing the cost of goods sold n other expenses. i dunno if 10% is the largest cost component.

i went to check the following companies' 2011/2012 annual reports.
i dont think 2011 was a good year. so i want to see if in a lousy yr. can the company survive without retrenching.
companies are picked randomly and as diff in industries.

Singtel (Telco)
Staff cost: 274m (1.4%) (I excluded director fee and options coz they account for more than 1b and not indicative of general employee)
Revenue: 19b
Profit after everything: 4b

Venture (Manufacturing)
Staff cost: 242m (10%) (no exclusion coz im lazy to check as its not easily available)
Revenue: 2.4b
Profit after everything: 142m

ACRA
Staff cost: 15.9m (29%)
Revenue: 55.4m
Profit after everything: 16.4m

Capitaland
Staff cost: 66m (2%)
Revenue: 3.3b
Profit after everything: 1.3b

staff cost is actually not that high.
in fact, ACRA has higher staff cost than most private companies! ROFL
labor intensive sia!

imo for other private companies, the cost saving from retrenching ppl is not significant.
altho from the CFO perspective, every cent counts and cutting staff is easiest.

sometimes i wonder wats the point of having corporate social responsibilities to help the society or to save the planet. when ur culling ur own staff and creating hardship.

 

[koxinga]

CSR is a public relations exercise for most companies. Ever see a company do CSR with some kind of branding involved?

 

[superman]

Lots of volunteers went to other countries to help rebuild homes when they did not even want to help their mom do housework. Tats CSR.

 

[ponpokku]

imo for other private companies, the cost saving from retrenching ppl is not significant.
altho from the CFO perspective, every cent counts and cutting staff is easiest.

sometimes i wonder wats the point of having corporate social responsibilities to help the society or to save the planet. when ur culling ur own staff and creating hardship.

the general misconception about cutting costs in corporates is to look into the 'expenses' dept, the truth is there are substantial wastage in many 'earnings' dept. in the end the logistics and backend dept also kena so jialat that the support cannot keep up, while the revenues are actually offset by the wastage in the 'earnings' depts.

 

[Jarlaxle]

CSR is a public relations exercise for most companies. Ever see a company do CSR with some kind of branding involved?

Lots of volunteers went to other countries to help rebuild homes when they did not even want to help their mom do housework. Tats CSR.

yeah, doing for show n marketing purposes nia.

 

[Jarlaxle]

the general misconception about cutting costs in corporates is to look into the 'expenses' dept, the truth is there are substantial wastage in many 'earnings' dept. in the end the logistics and backend dept also kena so jialat that the support cannot keep up, while the revenues are actually offset by the wastage in the 'earnings' depts.

but bo pian. sometiems its hard to maintain a higher margin.