What were some of the earlier cost reduction strateg(ies) & how they back-fired?

Lean Six Sigma Introduction Specialist Why has Six Sigma gained prominence amongst all organizations and individuals?
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Transcript

Many years ago, if you were only a graduate, you would have been a preferred choice of employment for the organizations. A few years later, organizations preferred hiring postgraduates. Recently, there was a boom in the hiring of MBAs. They were predominantly hired for their skills of denominator management. They considered people cost that is salary and wages as a major expense in the financial books of the company. Thus, they own the reputation of reducing this cost by rapid elimination of people from business processes.

For instance, a few years ago, many companies use the voluntary retirement scheme, commonly known as VRS, to reduce surplus staff. It applied to all employees who had completed 10 years of service or were above 40 years of age. But this move by the so called experts of denominator management backfired in many, many instances. Organizations later realized that just reducing the staff was not a key for cost reduction they had missed on optimizing their business processes. Their processes were not robust and had a lot of waste. They were still people driven.

With less staff at hand, problems escalated. Quality worsened, turnaround time increased and eventually customer satisfaction bit. This resulted in reduced business loss of customers lost grip on the market, share decreased profits and also paved an easy way for competitors to enter in the market.

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