Question 1.

Question1: In mature organizations, there is quite often a need to reduce labor surpluses. What would you suggest as other means by which to accomplish this objective rather than with layoffs?

One particular strategy we employ in our Mikes Bikes simulation, and I would think in some cases it would work in the real work, is to modify product or service pricing in the market place to increase volume. For instance when we adjust our pricing downward in the simulation, we see more sales requiring more labor to produce.
The adjustments made in labor within mature organizations, is one method of reducing expenses; are there other places to reduce costs? Our company scaled back areas like benefits in favor of keeping jobs. Monthly premiums were increased and the company portion reduced to cut expenses. Company cars were eliminated at certain levels and a car allowance paid to the employee; this reduced the company liability exposure while reducing expenses. Reducing headcount should be a last resort for corporations because of the effects it typically has on the remaining organization.

Questions to class...

Question 2: If by chance your mature organization established a “no layoff” policy, what advantages would this provide the company? Are there disadvantages? Which would you advocate and why?

If employees felt secure in their jobs then they might become complacent. A policy such as this would have to accompany a policy which states only high performance employees will be retained. This is the only way to cut deadwood and keep the employee base vibrant and creative. Set high expectations and offer a no-layoff policy, both would serve to build morale within the supporting ranks.

Question 3.

Question 3: We know that fast growing companies need more working capital than those growing more slowly or not at all, as in mature companies. What strategy would you use to ensure sources of cash as incoming cash flow is delayed, and fixed costs continue, and paydays come every week?

Our company forecasts our immediate cash needs up to 6 months into the future; we look at all receivables and if any accounts begin to fall outside the agreed to terms then we start making calls. In a couple of cases we didn’t have the cash to meet our demands so our parent company provided the necessary cash with our stock to support the inter-company loan. If we found an advantage to reduce inventory to free up cash, we did it. Some of our vendors could be contacted to allow for slightly longer terms to help out. The list to support cast demands is as creative as you can be,