Firms thatwant to cut costs must be careful not to trim too much in the name ofshort-term savings.
I moderateda panel earlier this month about how nonprofits can survive the economy. One ofthe categories was about managing budgets and how to determine what to cut andwhat to keep.
One of thepanelists relayed a sad and senseless story: He hired a fundraiser whose salarywas $40,000 and who brought in $400,000 his first year of employment. Thenonprofit he worked for still experienced some financial hardships because ofthe economy, however, so they chose to lay him off to save money. This guywas bringing in $10 for every dollar the nonprofit invested in him but all thedecision-makers saw him as was an expendable line item.
On theother hand, the panelists said, having to make cuts can also introduceopportunities to eliminate staff or other expenses companies tend to hold on toin greener times even when they shouldnt, either for emotional or politicalreasons.
Severalfirms I spoke with told me they had the best tax season ever this year. But nowthat its over, some will still have to make cuts.
Those thatare making those tough decisions need to take a hard look at what thosestaffers really bring to the table before sending them to the chopping block.
If theydont, firm owners may find themselves weighed down with the pocket change thatremains.