At Some Point, You’re Paying Someone To Poop....

In business, there is a constant need to eliminate cost.  Whether, but not limited to, SG&A(1), because they are seen as non-production cost (presented in an income state) or to minimize/offset financial losses (such as profit or losses from investments/acquisitions), ventures or to simply maximize Profit or Operating Income.  This is common in businesses large and small.  No one wants to spend wastefully.  Plain and simple.

 Cost cutting is a financial measure that is constantly being looked at, during times of good and bad financially.  SG&A seems to be the easiest place on an Income Statement to look for.  In many cases Labor is one of the next ones.  This line item is one is more sensitive ones and will be left for another discussion.

 Cost cutting can be seen in different forms such as a way to increase efficiency.

 However, in reality, at some point, you’re paying someone to poop.

 As long as people are doing the job, the people (employees) should be seen as the greatest asset to ANY business.  With that said Labor is just a vulnerable as SG&A when it comes to finding ways to cut cost. This cost is hidden in your Labor Budget and there is nothing that you can do about cutting it, but in reality it is a Sunk Cost(2).

 What is a 'Sunk Cost'(3)?  A sunk cost is a cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business may face, such as inventory costs or R&D expenses, because it has already happened. Sunk costs are independent of any event that may occur in the future.

 Constant desire to be as efficient as possible, doing more with less, better allocating funding, streamlined operations, etc., but you cannot cut out all non-production cost, which includes those times when labor is available, but unavailable. 

Any employer that has employees will at some point, be paying them to poop.

 It is a very thin line between inefficient labor, maximum productivity and overworked labor.

 No employer can control every single cost. Yet, there is a lot of time and money invested into trying to do so.  A little ironic, if you ask me.  No matter how hard we try to make every single cent have some kind of value added to the business at hand.  It is nearly impossible to achieve 100% efficiency.  Employees are a great asset and they come at a cost.  It is just the cost of doing business.

 And that cost is flushed.

 Source(s):

1 Sales, General and Administrative Expenses (SG&A): https://en.wikipedia.org/wiki/SG%26A

2 Sunk Costs: https://en.wikipedia.org/wiki/Sunk_costs

3 What is a 'Sunk Cost': https://www.investopedia.com/terms/s/sunkcost.asp