Gap Inc. is up on the high wire — balancing the necessity to cut costs with the hopes that having fewer people will help make its operations more efficient. 

And retail’s watching, especially since many other corporations try to drag off the identical trick already or about to take their turn.

The struggling Gap said Thursday that it could lay off about 1,800 of its headquarters and upper field workforce — a large cut for an organization that counts about 8,500 employees in its corporate offices out of a complete workforce of 95,000. 

Bob Martin, executive chairman and interim chief executive officer, said in an announcement: “We’re taking the needed actions to reshape Gap Inc. for the long run — simplifying and optimizing our operating model, elevating creativity, and driving higher delivery in every dimension of the client experience.”

Gap telegraphed cuts were coming in March, when it reported that annual sales dropped 6 percent to $15.6 billion, resulting in net losses of $202 million. 

The issue is that sales fell quicker than selling, general and administrative expenses — which were down 4 percent to an adjusted $5.5 billion last 12 months — while the associated fee of products rose. 

This 12 months, Gap is trying to get SG&A down more, to about $5.2 billion.

Cost cuts could make Wall Street completely satisfied, with the mathematics of the financial plan making less equal more within the near term, but less just isn’t necessarily more.  

“A leaner, more efficient Gap is a positive move,” said executive search expert Elaine Hughes, managing director of the E.A. Hughes division of Solomon Page. “Nevertheless, they should do an audit on accountability. Corporations have created layers and layers and thereby deflecting responsibility. 

“I feel the more essential query is, ‘Is there a “need” for the Gap brand at the present size,’” Hughes said. “We’re in an economy where luxury, value and purpose prevail — Gap has two out of three.”

So Martin, who’s been leading the San Francisco-based company since Sonia Syngal was ousted in July, has plenty on his plate as he tightens up operations for whomever gets the highest job on a everlasting basis.  

“These changes include the consistent brand leadership structures we announced last month aimed toward flattening the organizational structure to enhance the standard and speed of decision-making, while in turn reducing overhead expense,” Martin said. 

Trimming a company org chart may help corporations do more with less. 

Garrett Sheridan, cofounder and CEO of Lotis Blue Consulting, said: “Just having fewer people doesn’t improve the speed or quality of decision making. Nevertheless, having fewer layers in a corporation can.”

As a general rule, corporations can do well with six or seven layers of management from the CEO to the front line, said Sheridan, adding that some corporations have as many as 10 layers and want to reduce.

“When you may have numerous layers, what happens is a few roles turn into pass-through roles,” he said. “They’re not individuals who actually work. Fewer layers is nice.” 

Evaluating this and making cuts or additions is something good corporations do on a regular basis. 

“What you see when organizations make massive layoffs is typically it’s a little bit of a knee-jerk response,” Sheridan said. “And there’s fair cover for doing this in the intervening time; so many corporations are doing layoffs that you just’re not the bad guy when you do it too.” 

There may be also only a boom-and-bust cycle in the style business.   

“As soon as there’s any indication of fine times ahead and growth, all organizations are constructing,” said consultant Sonia Lapinsky, a managing director and partner within the retail practice at AlixPartners.  

And 2021 was a great 12 months across fashion, pushing many corporations to rush and grab whatever sales they may. 

“Growing revenues are inclined to cover up numerous mistakes,” Lapinsky said. 

When the revenue growth goes away, there’s numerous pressure to get costs in line, but Lapinsky said, “You possibly can’t just cut your approach to success.” 

It’s a matter of how costs are cut. 

“Certainly one of the issues as organizations grow is that they get very siloed,” she said. “Just cutting out layers isn’t going to eliminate the silo. You could have to take into consideration your overall operating model first, empowering people to make decisions the suitable way. Repeatedly we see retailers react too late and deal with making very fast cuts. You’ve got to be analytical and disciplined.”