Improve Quality or Reduce Payroll?

Tough economic times may require hard decisions by management for the survival of the organization. Too often, the first solution seems to be cutting costs by reducing the payroll.

Business results can be very sensitive to minor improvements in performance. For example, the Institute of Directors (IoD) reported in Business Excellence that a 1% boost in efficiency has a typical profit improvement of 1.9%, the same as for a 1% payroll reduction. However, quality programs that reduce costs or waste by 1% typically have a 7.9% increase in profits.

Managers, are you listening? Improved quality should be an integral part of your strategy.