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

Best,
Antonello

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

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

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

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