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Dr. Ross Reck

Attempting to improve a company’s financial results by cutting staff usually makes the situation worse for a number of reasons. First of all, cutting staff does not get at the root cause as to why the company is experiencing poor financial results.

This is what needs to be dealt with if a company expects to turn things around. Second, cutting staff deals a serious blow to company morale which causes huge reductions in productivity, innovation and customer service.

This, in turn, results in lower sales which, in turn, makes the financial problem even worse. The whole situation becomes a downward spiral that is difficult, if not impossible, to recover from. The current situations at J. C. Penney and Sears are excellent examples of this