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10-06-2020

Head count or productivity?

In the not too distant past business managers were prone to “empire building”. Increasing head count was more important than increasing productivity.

This bygone-age tendency has long slipped away but productivity is likely to remain as a leading consideration when businesses organise their use of human assets to run their businesses in the post-COVID economy.

Productivity should be one of the key considerations as we emerge from lock-down. Employers may need to make difficult choices if their ability to trade has been affected by COVID restrictions.

Who to retain, who to let go…?

Efficiency is a difficult quality to measure. Much depends on the entrepreneur’s ability to manage and release productive endeavour as well as the personal bent of individual employees to work effectively or otherwise.

When business owners start the process, who to retain after furlough ends on 31 October or who to lay-off, they will need to take a range of factors into account:

  • At what level will demand for products or services settle?
  • Based on this, what infrastructure is required to sustain this level of activity?
  • Can the new reality be financed? Is further investment required?

A number of businesses may close their doors. Those linked to the aviation or hospitality sectors will be severely challenged.

Those businesses that can see a light at the end of the tunnel will need to stay sharp. Planning to achieve this cannot be underestimated. During the coming summer business owners need to engage with their advisers and figure out what to do next.

One ingredient that should be considered as part of this process is what choices can be made to create and capitalise on productivity gains.

Source: Other | 10-06-2020


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