Finance for Non-Financial Managers training in NeuchâtelFinance for non-financial managers in the canton of Neuchâtel: how should scarce skills be valued when orders fall?
In the canton of Neuchâtel, microtechnology, watchmaking and precision microelectronics depend on scarce expertise exposed to demanding industrial cycles. How can a non-financial manager distinguish the justified cost of retaining these skills from spending that is no longer useful?
1. What the literature establishes: costs do not follow activity symmetrically
Mark C. Anderson, Rajiv D. Banker and Surya N. Janakiraman (2003, Journal of Accounting Research) show that selling, general and administrative costs do not necessarily fall as much when activity declines as they rise when it grows. This asymmetry is consistent with decisions to retain resources, particularly when adjustment is costly. It calls for examining why a cost is being maintained rather than immediately treating it as a failure of cost control.
2. The mechanism: cutting capacity today can make recovery more costly
Avinash Dixit (1992, Journal of Economic Perspectives) explains how uncertainty and irreversibility can give economic value to waiting before an investment or disinvestment decision. By analogy, losing a technical skill that is difficult to replace can make a capacity reduction partly irreversible. For a hypothetical workshop in Neuchâtel, immediate savings should therefore be compared with the future recruitment, training and requalification expenditure needed to resume activity.
3. The hasty conclusion: every retained skill is an investment
This reasoning does not mean that every resource should be retained through every slowdown. If demand changes permanently or expertise loses its relevance, retaining capacity may simply postpone a necessary adjustment. A useful analysis makes recovery assumptions explicit and identifies the conditions under which each option becomes preferable. (our executive and employee training programmes)
4. The limitations: neither local evidence nor automatic justification
The study of cost asymmetry concerns aggregate company expenditure, not the value of watchmaking or microelectronics skills in Neuchâtel. Dixit's framework clarifies a decision mechanism without providing a figure directly applicable to talent retention. In practice, budgets often describe current salaries better than the time needed to rebuild a team; those lead times must be documented rather than assumed.
5. A practical check in Neuchâtel
Within SHR's Finance for Non-Financial Managers programme, one possible exercise would compare retaining a critical skill with reducing and subsequently rebuilding capacity at a fictional microtechnology workshop in Neuchâtel. Using the same time horizon, the comparison would distinguish avoidable cash outflows, retention expenditure, recruitment and qualification costs, and the contribution margin on orders potentially lost during the ramp-up, without counting any expense twice. The verifiable measure would be the time between the decision to rebuild capacity and achieving qualified production, estimated from dated internal records and then checked against available observations. The manager could thus identify the downturn duration or recovery lead time at which the preferred decision changes. To go further: explore the Finance for Non-Financial Managers training in Neuchâtel in the canton of Neuchâtel, or browse our executive and employee training programmes in Switzerland.
In pictures: Finance for Non-Financial Managers in Neuchâtel
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