Cutting Expenses

March 31, 2008 at 12:00 am | Posted in Business | Leave a comment
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With the economic crunch in full swing, nearly everyone I talk to is going through some form of expense control. That’s a nice way to say, “Stop spending so much money.” Cost containment can come in a variety of forms, and much like the dynamics of the market itself, it’s not all bad. During good times, expenses can get out of hand in a hurry. This is true for individual households, companies, and even governments. It appears it’s just human nature to spend what you make.

The trouble is, when what you make begins to shrink, there is often a lag between the corresponding cut in expenses that must take place. Sooner or later, the lag becomes great and they turn the reigns over to the accountants to get things under control. Edicts are issues, expenses are cut, and margins fall back into place, but there is a hidden cost. That of morale.

What I’ve been trying to think about lately is how things would be different if we could push cost-cutting mostly from the bottom-up. I think there are some good ways to creatively energize folks to start saving one person at a time. I’m not talking about revolutionary stuff here. It could be something as simple as eating fast food while on the road instead of sit-down steak places. Little things add up quickly. But if you put the power to change things in the hands of the soldiers in the field, you may get the results your after while actually *increasing* morale.

People love to feel like they’re part of the solution. Top-down cost-cutting edicts can make them feel almost exclusively like their part of the problem. Like most good things, this doesn’t come without some difficulty. It’s more time consuming to explain everything to them. It requires more trust that they will actually buy into it. And it isn’t nearly as easy as plugging a number into a spreadsheet and being done with it. However, if people are truly your most valuable asset (as nearly everyone says) might it be worth the extra effort to give it a try? At least test it out on a team or two and see how it goes. See what ideas they come up with if you present them with the problem. People can be amazingly creative. If it works, a small reward would be nice. It doesn’t have to be anything huge, maybe half a day off, or a small amount of what they saved back in the form of a bonus, or let them tell you what they would like.

If something like this worked, you get a leaner organization, long-term buy-in to understanding why cost containment is important, and a group of people who are energized because they feel like they are empowered to affect *their* company.

Might be worth a try?

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