Punchinello’s Chronicles

June 3, 2009

Cutting Management, Not Sales

Filed under: Foolish Rants — Punchinello @ 2:51 pm
Tags: , , ,

How come we always hear about companies reducing production, laying off production-line workers and closing stores, but we never hear about laying off management? When was the last time you heard that in order to improve a business, the company was letting go of some high-paid executives? Or how about shutting down departments that don’t produce anything at all? Why aren’t they selling more, gaining market share and trying to get more customers?

And what about the government, where we always hear about cuts in programs but never hear about reducing payrolls in political offices? We hear about laying off social workers, but we never hear about cuts in staff at headquarters.

To produce something means to actually have something of value at the end of the production process. If I make a cake, I take raw materials and form them into a finished product. The cake, assuming it’s well made, has a value. People may not have the time to make their own cake, or they may not know how. So they’re willing to pay me money in exchange for the cake.

Another option is that I can type up a paper for someone at a university. They may not know how to type, or they type very slowly. Or they may not have the language skills to do a good job. So they pay me money to apply knowledge and skill on their behalf. I’m producing a finished product they’re creating, using my skills.

Productivity means creating something using raw materials or using skills and knowledge. One way or another, there’s nothing, then there’s something. The “something” that’s produced has a real value. People in the market place are willing to pay money for that created result.

How much money would be willing to pay for what the government produces? What does the government produce? How do politicians take anything at all and turn it into a value?

And what about the boards of directors, the corporate vice presidents and senior managers, and union leaders? How many managers and administrators does a given company really need? How much would you be willing to pay for the gobblety-gook reports generated by political commissions? How much would you pay for the memos that use up reams and reams of paper in every corporation?

Why don’t we hear about plans to invent new products? How come we don’t hear about plans to build things, fix things, invent things? Aren’t you tired of hearing “we need more money!” If you follow the Google Science and Technology news, there are some inventions and new games, and news about portable phones that do everything except offer clear phone calls. But is that whole sector of life important?

The more we hear about medical inventions, the more we also hear about the government wanting to take control of all that production for tax and regulation purposes. When we learn about new, entrepreneurial businesses, we hear that the government is stepping in to stop that kind of nonsense with new laws, regulations, fees, and licenses.

Wouldn’t it be nice to hear about a “boom” in new products like we had with computers? Instead, we hear all about how more and more regulations are going to slow down or stop any kind of excitement about anything new at all.

If you were running a company and every single day your employees only asked for more money, pay raises or salary increases, wouldn’t you at SOME point ask them what they were doing that was WORTH more money?

Definitely a mystery!


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