Beware the hidden cost of downsizing

As companies increasingly turn to retrenchments in response to pressures on their bottom line, they should beware the unintended but very real consequences that are likely to flow from a reduced staff complement, an expert warns.

“In many instances, the reduced profit due to staff disengagement could very well outweigh the intended savings on salaries and employee operating costs,” says Debbie Goodman, leadership strategist and founder of Jack Hammer, Africa’s largest executive search firm which recently expanded its footprint to the USA.

“If a company is under pressure, and then reduces its workforce to reduce costs, yet it doesn’t take proactive measures to ensure that the staff who remain are engaged and productive, chances are that it is still going to see lower profitability leading to a zero sum – or even negative sum – game,” she says.

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