Centralizing certain processes can also result in a need for workers. However, other options may be available to help cut payroll costs, including converting employees to a merit pay system. Whichever option an organization determines is appropriate, careful consideration needs to be applied to the organizational goals and plans and how cuts will affect the strategies in place to achieve these. Certain product lines and strategies could be negatively affected by a reduction in payroll. Additionally, core competencies could be forever damaged. In these instances, the organization may be saving money now, but destroying their earning potential in the future.
References
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Richmond, R. (3 Apr 2009). "How to cut payroll costs without layoffs." Business Week. Retrieved March 23, 2011, from http://www.businessweek.com/magazine/content/09_64/s0904048707309.htm.
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