Recessions are part of the normal business cycle, and its prolonged cases may lead to bankruptcy in business. To avoid negative impacts of the scenarios, restructuring the business through either lay-off of employees or reducing their wages is necessary. The choice of the economic issue's mitigating factor requires a well-thought decision by management before its execution. The best method that organizations can utilize is lay-offs of some of their staff.
Implementation of lay-offs leads to a reduction in the fixed cost of employment benefits. Lay-offs allow the business to reduce the expenses incurred in salary payment and benefits paid to the workers, such as insurance, medical cover, and commuter allowances ( Mujtaba & Senathip, 2020) . The firm also saves on expenses associated with the resources utilized by the downsized staff. The money from the staff lay-off can be reinvested or used to cater to the remaining staff's needs.
Delegate your assignment to our experts and they will do the rest.
Layoffs also allow business entities to implement reactive and tactical methods used to reduce production costs. Unfavorable economic conditions make most organizations realize the importance of modifying roles and make business operations more efficient ( Mujtaba & Senathip, 2020) . Lay-offs create an atmosphere of increased productivity and reduction in wastage in the organization's operations. The remaining employees increase their output by utilizing innovative methods of production. Layoff also makes it easy to boost job-delivery of the staff by subjecting them to well-planned and targeted coaching that fosters for development of interventions for cutting on production cost. Downsizing through layoffs is a strategic tool for cutting costs and improving a firm's performance.
The layoff is also a strategy utilized to make appropriate decisions to foster the business's overall sustainability. Some organizations have different branches, which requires a large workforce to run regardless of the output they make. For instance, a firm in the USA might have different outlets in other parts of the world, which can be more costly to manage during a harsh economic period. Laying-off some of its staff will allow the firm to make decisions, such as closing it temporarily until the recession is over.
Reference
Mujtaba, B. G., & Senathip, T. (2020). Layoffs and Downsizing Implications for the Leadership Role of Human Resources. Journal of Service Science and Management , 13 (02), 209. http://www.scirp.org/journal/Paperabs.aspx?PaperID=99284
