Layoffs are often the go-to move when you need to cut costs — and this is the season for cost cutting as annual budgets are finalized. However, laying off talent is expensive in the long run.
When you lay off talent, you lose people who are familiar with your company's culture and have been an integral part of past success. If you lay off your talent, you will face myriad challenges when things turn around and you need to ramp up. For example, finding and hiring talent is expensive. Getting a new employee up to speed can be costly and can disrupt your timeline.
Therefore, before you cut bodies, consider the following alternative strategies.
How complex is your company? Your products and services? Be honest. If the answer is “Too complex,” reduce complexities internally, so that you can drive growth externally.
Streamline your offerings
Take a look at your products and services. Are there any that are unpopular and/or unprofitable? Are any no longer on your roadmap? Eliminate them. This will let you reduce inventory and the costs associating with maintaining a product line or providing the service. Again, re-allocate resources to drive growth.
Manage for today without mortgaging tomorrow
If you focus only on quarter-to-quarter results, you'll run out of growth before you know it. Balance is the key to sustainability.
When you need to reduce costs, reducing headcount may be the go-to option. However, taking a longer view and considering other options may offer lower costs and fewer problems in the long run.