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> More precisely, they are able to turn about half of the salary cuts into profits in a 5 years window. Isn't that just...how it works? If you now pay $x less,
by Arrath 4y ago
> More precisely, they are able to turn about half of the salary cuts into profits in a 5 years window.
Isn't that just...how it works? If you now pay $x less, that $x doesn't leave the company accounts and is counted as pure profits?
I've not yet had a chance to get into the article, but will soon.
- marcosdumay 4y ago> Isn't that just...how it works? Hum... No. They are saving $x, and getting $x/2 as extra profits. But anyway, management is supposed to impact a company's revenue. As a rule, profits and salary should be correlated.
- yamtaddle 4y agoCutting salaries or jobs can incur other costs. Lost productivity (worse morale, you fired the person who knew the thing and now everyone else has to try to figure it out, whatever), overtime pay for those who remain, that kind of thing. It's like if you're spending money on ineffective ads that only produce a return of 50% of what you put in. You notice this and stop the spending. You're only saving half your spending, because the other half was offset by the extra sales already. [EDIT] Point is, it's conceivable that cutting spending could, even, reduce profit—it's not a given that spending less means greater profit, and certainly not that it means greater profit in the amount of the cut spending.
- Arrath 4y agoRight, yeah, duh. I was thinking too abstractly as in "the perfect spherical cow salesman in a frictionless vacuum"