Opinion on "how to counter laying off workers if a company implements automation or outsourcing some of the current worker's tasks?
April 30, 2010 8:51 AM Subscribe
Opinion on "how to counter laying off workers if a company implements automation or outsourcing some of the current worker's tasks?"
Need your opinion guys! :D
Situation : Company have been assigning task X to be done by its employees. Task X is a simple but is very repetitive. Task X would roughly takes 3 hours of a worker's time. Thus the worker can go home earlier. Earlier in the sense that its still after standard working hours but not way past working hours. Note that no overtime wages are paid for the workers.
Task X could be outsourced to a third party to be done. The outsourcing of task X would incur a new expense for the company but will allow workers to enjoy a better life. Besides that, the outsourcing of task X which will incur a new expense for the company but yet is somehow able to reduce the company's expenses in other ways (e.g. company's electric) and also increase productivity of the company (revenue might increase).
Upon the implementation of the outsourcing of task X, profit of the company increases. The top management of the company feels that with the outsourcing of task X and with increase profit, they feel that they are able to lay off some workers as the amount of job that the workers are doing has decreased since the outsourcing of task X. By laying off some workers, the amount of job that a worker needs to do increases.
Question : How do one suggest to the company to not lay off some of its workers after the outsourcing of task X? (Assume that the outsourcing of task X will increase the company's revenue)
I know that one of the primary goal of a company is to earn profit profit profit, but how do one suggest a solution to the above situation.
Thanks!
Need your opinion guys! :D
Situation : Company have been assigning task X to be done by its employees. Task X is a simple but is very repetitive. Task X would roughly takes 3 hours of a worker's time. Thus the worker can go home earlier. Earlier in the sense that its still after standard working hours but not way past working hours. Note that no overtime wages are paid for the workers.
Task X could be outsourced to a third party to be done. The outsourcing of task X would incur a new expense for the company but will allow workers to enjoy a better life. Besides that, the outsourcing of task X which will incur a new expense for the company but yet is somehow able to reduce the company's expenses in other ways (e.g. company's electric) and also increase productivity of the company (revenue might increase).
Upon the implementation of the outsourcing of task X, profit of the company increases. The top management of the company feels that with the outsourcing of task X and with increase profit, they feel that they are able to lay off some workers as the amount of job that the workers are doing has decreased since the outsourcing of task X. By laying off some workers, the amount of job that a worker needs to do increases.
Question : How do one suggest to the company to not lay off some of its workers after the outsourcing of task X? (Assume that the outsourcing of task X will increase the company's revenue)
I know that one of the primary goal of a company is to earn profit profit profit, but how do one suggest a solution to the above situation.
Thanks!
Why would no overtime wages be paid to the original employees, if they do Task X?
posted by BostonTerrier at 9:42 AM on April 30, 2010
posted by BostonTerrier at 9:42 AM on April 30, 2010
red_rika: Assume that the outsourcing of task X will increase the company's revenue
How? Will you be able to get more instances of X done in a given calendar day, and be able to take on more business? Otherwise, it just looks like outsourcing is an increased expense.
red_rika: Earlier in the sense that its still after standard working hours but not way past working hours.
I'm not sure I understand this. Assume a 35 hr week. If you don't have to do X, are you still working 35+ hours? If not, and you can't fill that work time, then layoffs are a (but not the only) viable option. If removing the task still leaves a worker with a "full" work week, then management's concept of a work week needs to be fixed.
posted by mkultra at 9:43 AM on April 30, 2010
How? Will you be able to get more instances of X done in a given calendar day, and be able to take on more business? Otherwise, it just looks like outsourcing is an increased expense.
red_rika: Earlier in the sense that its still after standard working hours but not way past working hours.
I'm not sure I understand this. Assume a 35 hr week. If you don't have to do X, are you still working 35+ hours? If not, and you can't fill that work time, then layoffs are a (but not the only) viable option. If removing the task still leaves a worker with a "full" work week, then management's concept of a work week needs to be fixed.
posted by mkultra at 9:43 AM on April 30, 2010
When they were first rolling out the self-serve checkout scanners in grocery stores, I was wondering what would happen to the employees. Then, I read an article (which I can no longer find) about how it turns out that many (most?) grocery stores didn't lay off workers when the scanners came in -- they just had them do other stuff, stuff they used to let slide because they wouldn't normally have had the time. Presumably the result was a neater, better stocked, better maintained grocery store.
posted by mhum at 9:58 AM on April 30, 2010
posted by mhum at 9:58 AM on April 30, 2010
Response by poster: Why would no overtime wages be paid to the original employees, if they do Task X?
- Because thats the way how my country works. lol. ASIA!
How? Will you be able to get more instances of X done in a given calendar day, and be able to take on more business? Otherwise, it just looks like outsourcing is an increased expense.
- Its just an assumption. The main topic is to how to counter layoff.
I'm not sure I understand this. Assume a 35 hr week. If you don't have to do X, are you still working 35+ hours? If not, and you can't fill that work time, then layoffs are a (but not the only) viable option. If removing the task still leaves a worker with a "full" work week, then management's concept of a work week needs to be fixed.
- In my country, the working hours are basically 8.30 - 5.30 . But usually it will be 8.30 - 8.30 due to the amount of work. Thats how things are done. So by outsourcing task X, workers could probably go back earlier, lets say 7.00?
posted by red_rika at 10:11 AM on April 30, 2010
- Because thats the way how my country works. lol. ASIA!
How? Will you be able to get more instances of X done in a given calendar day, and be able to take on more business? Otherwise, it just looks like outsourcing is an increased expense.
- Its just an assumption. The main topic is to how to counter layoff.
I'm not sure I understand this. Assume a 35 hr week. If you don't have to do X, are you still working 35+ hours? If not, and you can't fill that work time, then layoffs are a (but not the only) viable option. If removing the task still leaves a worker with a "full" work week, then management's concept of a work week needs to be fixed.
- In my country, the working hours are basically 8.30 - 5.30 . But usually it will be 8.30 - 8.30 due to the amount of work. Thats how things are done. So by outsourcing task X, workers could probably go back earlier, lets say 7.00?
posted by red_rika at 10:11 AM on April 30, 2010
mhum has the idea, generalized to "time that was wasted accomplishing task X can now be spent on improvement tasks Y and Z."
The way to sell it is the argument that current employees familiar with the company's procedures, culture, and market and in the best position to improve process and expand.
You might be interested in "7 Habits of highly effective people" and the chapters on "sharpening the saw" and "tending the goose" for great sound bites to explain this with.
posted by oblio_one at 12:51 PM on April 30, 2010
The way to sell it is the argument that current employees familiar with the company's procedures, culture, and market and in the best position to improve process and expand.
You might be interested in "7 Habits of highly effective people" and the chapters on "sharpening the saw" and "tending the goose" for great sound bites to explain this with.
posted by oblio_one at 12:51 PM on April 30, 2010
The top management of the company feels that with the outsourcing of task X and with increase profit, they feel that they are able to lay off some workers as the amount of job that the workers are doing has decreased since the outsourcing of task X.
You could point out to them that they can utilise their newfound excess capacity to do more business, generating more profits.
Let's say I have a factory and I'm producing 10,000 widgets a day with 50 employees. Each employee costs $200 a day, so my widgets cost (200*50)/10000 = $1 each to make, and I sell them for $2 each, so I make $1 in profit on each one, i.e. $10,000 profit a day.
Let's say I invest in some automation, so I can do the same amount of work with only 40 employees. The automation costs $1,000 a day.
If I lay off the 10 workers, my widgets cost (200*40+1000)/10000 = $0.90 to make. I still sell them for $2, so I now make $1.10 on each one, i.e. $11,000 profit a day.
On the other hand, I could reassign my 10 workers to produce more widgets. As 40 workers could make 10,000 widgets, with 50 workers, I could make 10000*50/40 = 12,500 widgets a day. My widgets now cost me (200*50+1000)/12500 = $0.88 each, so I make $1.12 of profit on each one, and I've got more of them to sell, so I make a total of $14,000 a day.
Even if to sell my excess 2,500 widgets I have to drop my price to $1.99 from $2.00, I still make $1.11 per widget, and $13,875 a day.
posted by Mike1024 at 1:13 PM on April 30, 2010
You could point out to them that they can utilise their newfound excess capacity to do more business, generating more profits.
Let's say I have a factory and I'm producing 10,000 widgets a day with 50 employees. Each employee costs $200 a day, so my widgets cost (200*50)/10000 = $1 each to make, and I sell them for $2 each, so I make $1 in profit on each one, i.e. $10,000 profit a day.
Let's say I invest in some automation, so I can do the same amount of work with only 40 employees. The automation costs $1,000 a day.
If I lay off the 10 workers, my widgets cost (200*40+1000)/10000 = $0.90 to make. I still sell them for $2, so I now make $1.10 on each one, i.e. $11,000 profit a day.
On the other hand, I could reassign my 10 workers to produce more widgets. As 40 workers could make 10,000 widgets, with 50 workers, I could make 10000*50/40 = 12,500 widgets a day. My widgets now cost me (200*50+1000)/12500 = $0.88 each, so I make $1.12 of profit on each one, and I've got more of them to sell, so I make a total of $14,000 a day.
Even if to sell my excess 2,500 widgets I have to drop my price to $1.99 from $2.00, I still make $1.11 per widget, and $13,875 a day.
posted by Mike1024 at 1:13 PM on April 30, 2010
To riff on mhum and oblio_one answers, the concept here is Opportunity Cost. If it turns out that opportunity costs are low, layoffs would probably be inevitable.
posted by sexymofo at 8:02 AM on May 1, 2010
posted by sexymofo at 8:02 AM on May 1, 2010
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Sorry in advance!
posted by red_rika at 8:53 AM on April 30, 2010