If this does not produce sufficient savings the next step is likely to be voluntary or compulsory
redundancies. The danger is that if the cuts are too severe there will be reductions in the quality of
the product and services to customers; the impact on employee morale will also make it difficult to
achieve the workforce commitment discussed in the previous chapter. Problems of employee morale
will be particularly severe if there is a series of cost reduction exercises over a prolonged period; these
will result in a loss of trust in management, an escalation in personal conflicts and increasing levels of
political activity.