Crying about cutting costs doesn't help

Crying about cutting costs doesn’t help

One problem is the language we use. We should talk about saving money, not cutting costs. If you think only about cutting, it is hard to be creative. And it is possible to be creative about saving money. More than possible, it’s essential.

November 19, 2012 3:09 by kippreport

Finally, you need to look at your corporate culture. Think about all the little things you can do to promote an energy-saving, money-saving, environment-friendly atmosphere at work. Encourage people to cycle and recycle. Don’t print emails unless you have to. Turn everything off at the end of the working day, unplug televisions and chargers (which consume a ridiculous amount of electricity), keep doors and windows closed if the air-conditioning is on, and turn heating down a notch or two as well.

These things are mostly common sense, but they set the right tone – one of mutual respect and consideration – while making a real contribution to keeping costs down.

In the course of exploring these and other possibilities, you may find you need to spend money in order to make savings over the longer term. Spend money on streamlining processes or investing in smarter systems and your initial outlay may soon be recouped by a reduction in your company’s permanent cost base. Perhaps you should outsource some back-office or non-core processes to low-cost countries. Or make a tactical promotional offer at the right time and in a carefully selected market, you might steal a march on the competition.

When it comes to hiring and paying staff, there’s one good thing about tough economic times – they make more talent available. So when you find good people, pay them well and treat them well. And don’t neglect training; whether you’re talking about new recruits or veterans, if they can learn to get more done with less, you’ll be making a net gain.

My attitude to spending is the same regardless of the state of the markets. When someone comes to me asking to spend money on something, I always ask: “Would you spend it if it was your money?”

If people answer no, or hesitate too long, they won’t find me reaching into my pocket. But if they say “yes, because…”, then I’ll be listening closely. The secret of success is to spend money on the right things at the right time – and there’s no better time than when competitors are retreating.

Whatever the economic pressures, you have to retain a long-term view. You have to give yourself the chance to grow, to be in position to take advantage when markets pick up.

A leader’s job is to create and foster a sustainable business for the long term. That depends crucially upon making your investments and divestments as selective and strategic as each other.

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