What Happens To Labor Cost?
The revenue generated by value analysis through cost reduction strategies and lean six sigma practices often offsets the labor cost. In some cases citing the transportation industries as well as the financial institutions, between 5% and 20% cost savings can be achieved.
The cost reduction amount realized can be used to mitigate the labor cost.Companies have the choice to use these cost reduction realized savings as back up support for payroll short falls when ever possible.
As always, valuable employees can be motivated more by awarding bonuses based on their cost reduction savings performance. This can be a win win situation for both the employer and the employee.
The Need to Promote Valuable Employee Retention Bonus
Becoming the benchmark for the competition carry’s weight. You will be subjected to more excellence by both your customer’s and the competition and this alone will keep you and your company working even harder to retain the edge as the benchmark for the competition.
Furthermore, employer’s need for valuable employee retention to work on additional cost saving projects is justified.
Incremental revenue accrued through implementation of value analysis becomes more meaningful especially when the very same employees who are bringing in the extra cash are given fair amount of job security.