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Labor Cost

In: Corporate Restructuring

Author

Listed:
  • David E. Vance

    (School of Business Rutgers University)

Abstract

Salaries, wages and employee benefits are among the most significant costs any company faces. Attracting and retaining the most talented individuals is expensive, so restructuring involves a balance between getting the best people and managing labor costs. Among the first tasks of restructuring is to determine whether a company has the appropriate number of people. Most underperforming companies have excess people. Industry norms can be used to set head-count targets. Targets can be reached in an orderly way by culling low performing employees, increasing the span of control of middle management and dramatically reducing the number of employees who don’t make or sell products, service customers or measure company performance. A head-count management system can facilitate this effort. Other means of controlling labor costs while maintaining competitive salaries include use of salary surveys, improving controls over workers compensation, overtime and unemployment compensation. Labor cost details can make the difference between a superior company and an underperforming one.

Suggested Citation

  • David E. Vance, 2009. "Labor Cost," Springer Books, in: Corporate Restructuring, chapter 0, pages 47-66, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-01786-5_4
    DOI: 10.1007/978-3-642-01786-5_4
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