Due to the recession, there is one term which has become very popular, most of us have heard the term in our Organization irrespective of the size(whether its listed in Nasdaq or in NSE). The term is cost cutting.
Many Organizations misunderstand the concept of Cost Cutting. Cost Cutting refers to reducing unwanted costs, whereas the organizations cut few benefits which are offered to Employees. Such methods may sound like reducing costs in the short run.
Few organizations have already implemented few effective ways of cost cutting. They do not allow Employees to stretch their work timing, which entitles the Employees to few additional benefits like cab drop, additional allowances etc..
When an Employee increases his work timing his productivity decreases but the cost increases. Organizations have understood the stretched hours are not increasing the yield but increasing the cost. You can see in this pic how an Employee is working! in stretched hours..
The old saying is that 'A penny saved is a penny earned'. The saying is too old that now-a-days mere savings will not help. Whether its a organization or an Individual the actual benefit of cost cutting lies in utilising the saved expense in a productive way.Let us see an illustration. Lets see the story of Mr A. Mr A has a bike and a car. If he travels to office by car he would end up spending three times more than what he would have spent if he had travelled by bike. He travels by bike to save money. End of the month if he doesnot invest the money thus saved it will not have any value. Most of us make this mistake. We claim to have saved some amount through cost cutting, but we do not invest the amount thus saved.
Many organisations have succeeded in implementing cost cutting techniques, unless they invest thus saved money it will not yield better results in the long run.
