Often manufacturers cite that their narrowing profit margin is the only reason they lay off their employees. Do you think the reason is justified? I don’t think so. I rather consider it a cruel reason indeed. How can a business claim to be kind with the third persons (customers) when it does not hold any kind feelings for its own employees? The strategy of downsizing is not only cruel for employees but its wrong implementation can also be fatal for wholesale manufacturers.
Why the need of employees’ layoff arises?
This is a modern era where manufacturers need to restructure their businesses every now and then. The high local and international competition leads them to think of ways to widen their profit margins. This high competition is extremely bad for manufacturers, since it is a threat to their survival.
High competition costs and huge discounts cut down the profit margins of manufacturers to an incredible extent. In order to avoid selling at breakeven points, they are left with no other option than to cut down their cost of production. Here too they can’t comprise on the cost of raw materials and products finishing, since modern customers are quality conscious. The only way out for them is to bring down their cost of labour though employees layoff.
How employees’ layoff can be fatal?
Employees’ layoff is advantageous only for the short term and its long term affects are quite hazardous. Those manufacturers who know how to implement this strategy remain successful in making the most of it while, for the majority of manufacturers, this strategy proves to be fatal. The negative impacts this strategy initiates in the business are briefly descried below.
• When the Wholesale Suppliers lay off high number of employees, the responsibility of the extra work falls on the shoulder of the retained employees. They have to manage their work along with the work of others. This increases their work load to an incredible extent and badly destroys their work efficiency. Sometimes, the manufacturers face serious delays in meeting their deadlines which often results in huge customer losses.
• The laid off employees are a threat to the business, because nobody ever feels happy when they have to kiss goodbye to their source of income. It becomes easy for the employees to file discriminations, harassments and illegal acts complaints against their former employers. These employees can file the lawsuits either individually or can also team up to file class action law suit against the firm. These lawsuits spoil the reputation of the business and also require heavy settlement fees and payments.
• Employees’ layoff makes a general wave of discontentment in the organisation, since retained employees start believing that company does not value them. Moreover, when they see old employees getting fired, it creates a feeling of distrust and sadness among them. This badly destroys their morale and reflects in their performance. The higher level of job insecurity leads them to start updating their CVs in order to secure better jobs and save themselves the embarrassment of getting fired.
• The layoffs are often announced on media, which affects the reputation of business. This leads the potential employees to believe that the company is not stable while customers also suspect that there must be something wrong with the firm. The wholesale business faces challenges in attracting quality prospects in the long term. Moreover, if the firm repents firing good employees, it can neither call them back nor can find their replacement. Even if it gets successful, it has to spend a lot on the training of the new employee.
Point to Consider!
Though this strategy is cruel and fatal for Manufacturers but sometimes its need cannot be ignored. During these times, lay off some employees who have performed poorly in the organisation, and try to retain as many as you can. No matter how bad the circumstances are, never fire more than one fourth of your labour force. Always try to find other means of widening your profit e.g. adding value to the product or restructuring your marketing strategies etc.

Author's Bio: 

William King is the director of Wholesale Manufacturers, UK Wholesale Suppliers, UK Dropshippers and UK Manufacturers. He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.