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How Much Does Cost Containment Cost?

COST CONTAINMENT is a procedure used by many businesses to increase profits by reducing expenses. This in of itself does not sound overly ominous until you are fully aware of how much this initiative costs which cannot be measured in dollars and cents alone. The only way to even get a sense of the cost of cost containment is via usage of the word staggering.

I recently read an article on MSN which revealed that in the land of Mickey Mouse (M-I-C-K-E-Y M-O-U-S-E) aka Walt Disney were “repositioning” most of their IT/Tech Staff in favor of H1B holders whom they could pay less to. To add insult to injury Walt Disney had the chutzpah (audacity) to saddle the soon to be displaced employee with the task of training their replacements.

When you factor in spikes in unemployment claims, rising health care costs due to the loss of health insurance, increased mortgage defaults you are left with a crisis that may eventually dwarf the recession we are still teetering in and out of. In a sense, we are being financially victimized by the technology we created.

As with all crises or disturbing trends, there is an underlying cause that allowed or is allowing this to happen. One such cause is the sometimes unrealistic salaries that are being demanded of employers. The salary an employer will pay is predicated on the value of the position for which it is being paid. When a company in their eyes is forced to overpay for less than value added talent the wheels of the cost containment process are put in motion.

Paying very little for a lot in return is not the principle of what our economy is based on but it is the ideal scenario for many companies in today’s job/labor market. Supposedly, increased productivity with decreased payroll costs is too enticing for far too many to pass up. Sadly there is a shortage of forward thinking executives who want to be the exception to what is becoming the rule as described above.

The 2016 Presidential sweepstakes will play a large role in shaping the future. Conservative candidates are greatly disturbed by American workers being forced onto the unemployment line as their job was sent to another country. If that mindset successfully convinces voters to put them in the drivers seat of our economy we can look forward to jobs coming back into the country while managing to satisfy the cost vs. profit needs for corporate America.

I do not profess to be an economics expert nor a labor market analyst. I do however firmly believe that the role of the sales person who by virtue of what they do creates new jobs. Policies and philosophies have their part. But by and large, it is the salesperson/entrepreneur who play the key role in all of this.

As the year progresses,  new classes of graduates will emerge and look to migrate into their chosen careers. Let us first congratulate them on their achievement and wish them luck. Let us hope that all of the years of study they put in and all the tuition they paid will not claim them as victims of cost containment as well.

The world looks for America to be at the forefront when it comes to technology, medicine, science and the like. If our best and brightest are not the ones leading the way America’s debt load will become so bloated it will take generations to pay it down.

How much does cost containment cost? Look into the eyes of a new born baby and apologetically whisper you are sorry for what has happened, and for any part you have contributed, but now the baton of responsibility will soon be passed onto him. That is the real cost of cost containment.

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Joel Elveson
Joel Elvesonhttps://jelveson.wixsite.com/recruitersite
INDEPENDENT Executive Recruiting By Joel is an "up and coming" Executive Search Firm formed and headed up by Joel Elveson whose visionary ideas, leadership & creativity have brought to life a more "user-friendly" approach to recruiting. His clients and candidates form powerful strategic partnerships that we use to help you. Joel’s Firm offers Permanent, Temporary (case by case), & Temporary To Permanent staffing solutions for all of your Human Capital Requirements. Contract IT/Consultants are available if needed. Above and beyond they are experts (by way of their personal industry work experience) with mortgage, mortgage banking, middle-market banking, accounting, along with many others under the vast financial spectrum of disciplines. Their business goes beyond candidate recruiting as they also train, mentor and develop your internal recruiting staff with an eye towards helping you reduce the cost of hiring. They will also work in areas such as compensation, effective onboarding processes and alike. In other words, their business is to help your business by becoming an extension of you by filling in gaps that cause delay or waste. The recruiting methods employed by Joel’s team are time tested that results in a high rate of successful placements. Joel was trained in the art of recruiting by some of the top staffing industry executives in addition to the best recruiter trainers who to this day drive me to exceed the lofty goals he has set forth.

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6 CONVERSATIONS

  1. Thanks a lot, Dear Joel Sir, for this ‘hot potato’ of a topic! Your deep analysis takes us all the way into the future of the newborn, viz. definitely alarming. Before I go further, please allow me to categorically state the fact that my following comment does not, in any form or manner, whether directly or indirectly, challenge your concern.

    What I see above is one specific aspect of cost-cutting measures that arouses public disdain, and hatred for the H1B Visa holders. The remaining portion of cost-cutting initiatives has proven to be way more effective, time and time again. I have personally helped companies in N. America save millions of dollars without ever cutting a single job or even touching their payroll at all.

    For those conscentious enough, there are thousands of loose ends, and as many points of leakage they need to plug and strenghthen their bottom line.

    Cutting waste, and enhancing productivity are the ‘Mantra,’ not just H1B alone.

    Thanks!

    • Bharat, your comments do not come off as being a challenge. You are more than entitled to your opinions. H1B’s are disliked due to the actions of companies like Walt Disney who brought these people in with the idea they could be paid less than thier American counterparts. Having the person who is going to lose his or her job to an H1B will bring contempt. This issue goes beyond H1B’s. Cost containment also involves asking one employee to do the function of two jobs while only being paid for one. Taking away certain amenities or things like Paid Time Off, reduction of paid holidays and so on fall under this category. If a company is looking to cut costs inorder to realize a greater profit they will go to extreme measures not realizing or not caring what the long term ramifications will be. Lastly, it has been my pleasure exchanging thoughts and opinions with somebody of your intellect. There is an old saying “never argue with a foool as people may not be able to tell the difference.”

        • Dear Joel Sir, your last message repainted the entire picture with the brightest colors I could ever find anywhere on the face of the earth. Looking at the first response, I was about to thank you for showing me my real worth when the clarification came in flying in front of my eyes.

          Now, I can rest assured, fool or not, we are not in the stage of an argument.

          • Bharat, two people do not have to share the same opinion nor will they always agree. Differences of opinions can be very healthy as long as both parties are allowed ample time to express their opinions with the complete absence of name calling, insults, putdowns and alike. In other the words, the key component is respect. However, the above does not apply to American political debates where the name of the game is to sling as much dirt at your opponent as possible, drag their families into the debate, lie, make up baseless accusations about your opponents (ala then-candidate Trump making up vicious and slanderous lies about his opponents’ wife) anything and everything to score points with the voters. In your case, I hold you in very high esteem. As stated earlier you are NOT an idiot or anything even close. It is more than acceptable for either of us to disagree with each other as long as the discussion is conducted in a respectful manner.

  2. This reminds me of some bumper stickers I saw a while back.
    In the ’70s I saw “It not much, but it’s mine.”
    In the ’80s I saw “I owe, I owe, it’s off to work I go.”

    Disney is more of a villain than their own cartoon villains.
    First it was Snow White, then bumper stickers, now Frozen. They even own the Avengers.

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