Monday, December 15, 2008

Cost Cutting – How’s that working for you?

It’s not just Dr Phil. who is asking the question, “How’s that working for you?”

We see cost cutting almost everywhere as companies attempt to pare back to salvage some of their profits. We see the dramatic reductions in force and the increases in unemployment numbers. We see the projects and initiatives being half funded and abandoned and know that the result will be substantial revenue losses in the future. We see the scramble to reorganize with the lower level of resources. Yet, we see expectations of output remaining high.

And we ask, “How’s that working for you?”

For most companies, the people leading the cost cutting are the same people who have led the business and their expertise is not in the cost cutting and re-planning. The most notable in the news today are the big three automakers. They have great plans to cut people and shut down plants and are underway with their actions. How do you think they will do? Do you have great confidence that they will choose the right plan and put best practices into play? The stock market doesn’t think so and is hoping that when the government comes through with the bailout, a government oversight group will be appointed too. For those of us in the business world, that is clearly the blind leading the blind.

How’s that working for them? Not well!

It’s not just the huge corporations who are scrambling. Many small and medium sized companies are struggling too. They are doing their best to cut costs and stay alive and many are failing. Additionally, they have lost their focus and are no longer operating as a unified organization.

How’s that working for them? Again, not well.

With all of the money that is being spent in the cutting of costs, one would think that some of it would be allocated to bringing in some cost cutting expertise. These resources have the knowledge and the experience in cutting the right costs and then refocusing the company to use the remaining resources in the most effective and efficient manner. Unfortunately, this expertise is viewed as a cost in and of itself and cut first. In reality, it is the best investment that could be made since it can return its value many times over.

We have written a number of articles on best practices for cost cutting and the best implementation programs. They all start with setting up the right plan based on the company’s goals and objectives and scaled according to the resources available. It is this planning and then the execution of the plan that is so critical. Properly done, not only will the company be able to survive the economic downturn but be in a position, with its best people intact, to move forward when the economy improves.

How’s that working for you? If your response is not, “Its working well,” then contact us. We can help.



John Maver
Maver Management Group
(925) 648-7561
Maver Management

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