Why the heads are rolling from all sides?

Organizations face tough time in lifespan of their business. These days it doesn't even surprise anyone hearing story of such an organization. Every second organization, irrespective of its nature of business, is facing tight business scenario at the moment. Our organization is no different. 

Irrespective differences in nature of business, the approach to deal with tough time is usually common across all the businesses. The first thing that happens is downsizing of resources.  In our organization as well at the moment, heads are rolling, most of them involuntarily and some voluntarily foreseeing the uncertain future that lies ahead.

In my perspective, downsizing portrays the weakness of the organizational leadership, in more than one ways. It is an impulsive decision making rather than thoughtful cognitive decision making.

Nearsighted management - When the organization starts retrenching its staff abruptly, without any prior warning or giving out signs of its inclination to do so, that means management was sitting like a lame duck, unaware of what is happening around, waiting for disaster to happen and then take firefighting measures which in this case means ruthlessly sacking of resources. 

Hoarding extra mass - Is there a need for management to retrench resources in first place? If there is, it means organization was always in trouble. It had always been carrying financial burden of these extra resources all this long, making them part of disaster the organization is struck with.

When we club above two points, we draw following conclusion - 

1. Knowledgeable and foresighted management always knows the importance of lean organization. It maintains right resource balance in the organization.

2. It doesn't allow unwanted and extra resources in the organization, which it would end up sacking. 

Cost cutting versus Cost reduction

To me cost cutting is the last resort for an organization to consider. 

In many organizations, specially from service industry, resource costs, which means the salaries, are the highest organization spending. When a services organization faces adversities, in most cases, it targets to reduce its expense in salaries given out. 

Where as the facts may be contrary to it. For an example, it is possible that the salaries they are paying may not be burdening the organization. It may be the cost of stationary that organization is consuming is very much high. If organization switches to paperless office it might reduce the cost drastically. 

I advocate that the cost reduction should always be a high priority of the organization. Management should periodically be asking  - where the organization is spending. Is there an alternative to it? 

If an organization is operating in low cost environment, it will always be in a healthy state when other businesses are beleaguered with adverse environmental factors. Besides that it will make the organization more agile to adapt itself to market situation.