| | Procurement
professionals will be at
the forefront of
organisations’ new focus
on cost reduction but
the new report
highlights the need to
avoid cutting costs
across the board.
The new report,
entitled Intelligent
cost-cutting, argues
that most cost cutting
is ineffective because
the costs creep back in.
For cost cutting to be
sustainable,
organisations need to
understand how
expenditure saved in one
area can actually
increase expenditure
elsewhere. Crucially,
they also need the
support of their
front-line managers, so
cutting people should
always be a last resort.
Fiona Czerniawska,
one of the founding
directors of
sourceforconsulting.com
and a worldwide
authority on the | |
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| | consulting industry,
commented: “These people
are the bridge between
you and your customers.
It is their attitude,
motivation and
commitment which will
determine whether their
teams – and ultimately
your customers – stay
with you through this
recession”.
Brendan Cahill, chief
executive of performance
improvement consultants
Trinity Horne, which
sponsored the report,
comments: “Organisations
focus on straight
percentage cuts in costs
because it is the easy
option. We are delighted
to be associated with
this report which
highlights how costs can
be cut both selectively
and sustainably”.
The report identifies
10 critical success
factors in cost-cutting
projects:
1. Take a holistic
perspective: make sure | |
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| | and uncertainty to
fester, to the detriment
of performance.
5. See cost
cutting as change
management: make sure
you focus on your
people, not just
technology and processes
which can look like the
main drivers of costs.
6. Communicate:
swift action has to be
accompanied by clear
communication. The
reverse is usually true
in practice.
7. Engage: taking
a scythe to an
organisation runs the
risk of cutting out the
heart of what people
care about.
8. Do it quickly:
organisations are
accustomed to programmes
of change which last
years, but cost cutting
is different. People are
far more likely to be
de-motivated if the
process is drawn out.
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9. Measure
progress: we are all
familiar with the dictum
that only what gets
measured gets managed,
and this is especially
important when it comes
to keeping costs under
control.
10. Keep the
pressure up: in some
ways, implementation
here is no different to
that of any other
project. The sponsorship
and commitment of top
managers are essential.
With contributions
from around 30
organisations, and a
case study from Virgin
Media, the report
examines what tends to
go wrong in cost-cutting
projects, how to ensure
they succeed, where
consultants might be
useful and where they
are not and includes a
section on the different
approaches to
cost-cutting that
consulting firms take. | |
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