Department Manager to his boss, the Senior Manager : Sir, I have studied the financial statement in detail. Our biggest cost is employee cost, which is obvious as we are in the services business. Almost all the employee cost is committed cost, which is written into the hiring contract of employees. The only discretionary expense, if I can call it that, is that of Transport, which we provide to everyone. That is not a part of the contractual terms. However, to save cost, if we take away the Transport facility, it could result in a huge backlash from employees as providing Transport is the norm in our industry. I don’t think there is any opportunity of reducing the employee cost.
Senior Manager to Department Manager : But we are one of the leaders in this industry (even though there are twenty other companies larger than us and growing faster we will ignore that fact). We have to set the pace for the industry. Others look up to us (I don’t believe this but am saying it for effect) to set standards and introduce the revolutionary new ideas that they can follow. Rest assured, what we do today will be replicated across the industry tomorrow. Have no fear. Implement the decision to withdraw Transport.
A few weeks later
Department Manager to the Senior Manager : Sir, our operations are seriously jeopardised on account of staff shortage. People are resigning and leaving in droves. And those who have not left are not turning up for work. We have no choice but to reinstate the Transport facility.
Senior Manager to Department Manager : This is total mismanagement. Why did you withdraw the facility without taking employee feedback ?
Department Manager to the Senior Manager : But, sir, you…
Senior Manager to Department Manager : No ifs and buts. Reinstate the facility immediately and apologise to them for your hasty and ill-timed action.
Two months later
Department Manager to Senior Manager : Sir, while the high attrition of two months back is coming down, it is still quite high. I have a suggestion for cost reduction. Instead of hiring graduates, we should hire under-graduates. They will be available for a lower salary. We can provide a little bit of training to make them ready. The additional cost of providing training will be more than offset by the saving on salary within three months.
Senior Manager to Department Manager : Hmmm. Worth considering. What are the attrition trends from this group in the industry ?
Department Manager to Senior Manager : No data available sir. This is a revolutionary new idea. Nobody in the industry has implemented it.
Senior Manager to Department Manager : Don’t be foolish, if it was such a good idea someone would surely have tried it by now.
Department Manager to Senior Manager : But sir, you said we are the leaders in the industry and….
Senior Manager to Department Manager : Shut up and go away.