Be Different or be dead

April 10, 2010

How cost cutting can be done without losing customers

Source: Pexels

How cost cutting can be done without losing customers.

When operating margins get squeezed, organizations go on a cost cutting rampage often without reflection on their strategy. This approach is a disaster waiting to happen.

Here are some guidelines for collapsing your cost envelope without being sorry later for your actions:

1. Avoid considering activities that impact how you serve customers — Customer serving functions and people are definitely NOT in the ‘low hanging fruit’ category.

2. Examine quick hit opportunities to simplify business processes — Cut out unnecessary steps that impair effectiveness. Less complex processes will drive expenses down.

3. Eliminate layers in your organization that ‘manage’ and do not directly contribute to the output of the organization.

4. Throw out low value-add positions— Any ‘or’ jobs such as ‘co-ordinator’, ‘administrator’, and ‘facilitator’ should be considered for elimination. You need doers not people who work with the output of others.

5. Cut the crap — Anything that does not directly serve the strategy of the organization should be hacked. This is essential in good times; it is critical in challenging times. Training programs, for example, that don’t support the strategy (customer service, marketing and sales) directly should be stopped.

6. Look at temporary positions— Consider keeping only those that are in the serving customers value chain.

7. Mass media advertising.— Should be eliminated in favor of targeted “me marketing” programs.

Incent your leaders to remove non-strategic costs. Change the bonus compensation plan to make it matter for all of them.

Cheers,
Roy
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• Posted 4.10.10 at 01:00 pm by Roy Osing
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