What to say if the interviewer asks me about what I think about cutting labor costs?

interview questions Personal Fit
New answer on Nov 30, 2019
6 Answers
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Anonymous A asked on Nov 27, 2019

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Clara
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replied on Nov 28, 2019
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

And even before appying all the valuable knowledge of the past posts, I would start with a simple "do you want my personal opnion on the topic, or the professional one"? Like this you also ensure what he/she is looking for, since this can be a delicate topic and answer.

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Anonymous A on Nov 28, 2019

thank you for your answer. Yes, indeed I was looking for some inputs regarding how to navigate if the interviewer wants a more personal opinion on that matter, not an approach on how to cut the labor costs. What if I am staffed on a case with clear, direct, negative social impact? So far, I was thinking of arguing that as we are operating in a capitalistic market; from time to time companies need to make some cuts in order to ensure competitiveness for the remaining organization. so avoiding worst case a bankrupties and failures such as Toys'R'us, Blockbuster, etc. What do you think?

(edited)

Antonello
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replied on Nov 27, 2019
McKinsey | MBA professor for consulting interviews

Hi,
starting with a benchmark with competitors about efficiency and cost would be a good approach to handle the question

Best,
Antonello

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Emily
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replied on Nov 28, 2019
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University

Hi,

Just to add on, other than quantifying the potential benefit/saving in labor cost reduction, also think about the qualtitative bits, e.g. would there be any hurdle like union, would there be any potential implication or risk on other aspects like quality of goods/service, is labor cutting a needle mover or is there any other more important things to focus on, etc.

Cheers,

Emily

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Deniz
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replied on Nov 29, 2019
BCG | A.T. Kearney | University of Cambridge | 350+ coachees | 5+ years of consulting experience in London, Dubai and Istanbul

Hi,

I personally was involved in labor cost-cutting projects at BCG, unfortunately, it is part of the job, thus you shouldn't shy away from including this in your analysis. However, you should also highlight the potential downsides of this (from philanthropic and brand image damage points of view).

Best,

Deniz

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Vlad
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replied on Nov 27, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I would structure the approach as the real project:

  • What is the labor cost composition and what are the biggest costs
  • Benchmarking of the biggest costs to find the improvement potential
  • Process improvements to meet the benchmarks
  • Costs and benefits of the proposed initiatives

The key concepts that you have to learn:

  • Internal / external benchmarking
  • Idle time
  • Core processes (usually are optimized) and the supporting processes (usually are cut)
  • Math structures (Frequency of operations * time per operation)
  • Other useful structures (e.g. people - process - technology)

Feel free to reach me for further help with these cases.

Best

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Udayan
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replied on Nov 30, 2019
Top rated MBB coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases

Approach cutting labor from both a practical and human angle. From a practical perspective, if the company needs to cut labor in order to be more competitive, productive or change focus then it may be a necessity. Similarly, it is unlikely people want to be in jobs where they don't feel valued and where their contributions aren't making an impact.

The human element of cutting labor cost comes in via the fact that even though people need to be let go there's a good and bad way to do it. The good way involves being transparent, providing reasonable severence, and access to services to get re-employed. Often organizations get this part wrong and that's where it leads to a lot of conflict and negative issues

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Clara gave the best answer

Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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