Business Strategist, David Ofosu-Dorte, has advised business owners to hold off reducing staff even as businesses battle challenges due to the prevailing harsh economic conditions.
According to him, while he agrees retrenchment is an easier solution to address the cash crunch, business owners must rather explore cutting administrative costs and increasing productivity instead.
He noted that laying off staff will merely add to the social problems the country is facing and would not necessarily improve business.
“I will look at the number, and I gave you percentages, if my percentage of remuneration or staff cost is above 35% of my total, I will make a decision on that. But there are ways to cut. If I can consciously cut cost of administration, I will cut that rather than let employees go.
“If I can cut the net profit that I make, I will cut that than rather let employees go. Because you’ll be adding more to the social problem and as a Ghanaian or as an African you need to take that factor into account. That’s one thing I’ll take into account,” he said on JoyNews’ PM Express Business Edition.
He also advised that employers need to ensure that employees increase productivity in order to create other streams of income to support business operations.
“It will be important for me to also understand that the staff have to be… talked to regarding productivity and their ability to make sure that they produce to the level that we can earn other sources of income, especially non-government dependent income. So I will rather retain staff than let staff go,” he said.
Mr. Ofori-Dorte explained that while laying-off staff might look like the preferable option in these harsh economic conditions, when the crisis passes and there is the need to increase staff, it might incur an even larger expense for the company.
“The issue of letting staff go is often the easier route and I agree. But if you look at it, within a certain period if the economy recovers, then getting them back is of a larger cost. So look at your entire strategy, are there ways you can maintain staff, I will not recommend that [retrenchment] as the first point of call.
“What I will definitely recommend is be very careful about increasing staff because I think there is too much uncertainty in the system,” he advised.