To be a successful manager, one must put into place an efficient approach to managing costs. Increased competition, coupled with deregulation of the market in the present business world, has necessitated managers to develop an accurate way of managing a workforce. Some managers opt for across-the-board layoff. Even though this approach of reducing workforce might result in cost reduction, it is not efficient given that it does not consider the productivity of a worker. Secondly, across-the-board layoffs might lead to dumbsizing since a productive worker might be laid off in the process.
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Furthermore, labour restructuring has an impact on the value of a company. The value often rises following an announcement to restructure a firm. However, investor confidence diminishes once restructuring starts. It is therefore pertinent for a firm to concentrate on the efficiency of a labour restructuring program.
For labour restructuring to be a success, a firm has to work in line with the efficiency rule of evaluating input into a production process. According to this rule, the production cost can be efficiently reduced by examining the marginal product per dollar wage paid to a worker. It entails ranking employees according to their score in marginal product per dollar wage. This reflects the theory of production, i.e., labour is an input into production. Employees whose score is the least are supposed to be the first ones to be dismissed from employment. Compared with across-the-board layoffs, the efficiency rule has maximum cost saving. Furthermore, across-the-board layoff culminates into dumbsizing.