Whether in the public or private sector, few executives have the luxury of ignoring the agenda of cost reductions. No matter what the strategic requirements for the institution or company are, the consequences of cost-outs will be negative for a number of individuals. These uncomfortable facts lead many top managers to shy away from planning and conducting these processes in the most optimal way.
The responsibility is hidden in a budget process or pushed down the organisation, perhaps backed by ambiguous benchmarks. Too often, the savings end up being temporary or damaging to the core of the business. However, if you apply highly customised approaches that match the organisation’s strategy and culture, cost-outs can be translated into lasting results and a sharpened focus on cost consciousness in your organisation.
In this serial, Christian Sparrevohn, Partner at QVARTZ, will share his beliefs about how you successfully manage cost cutting. The beliefs can be summarised in five points.
QVARTZ’ five beliefs about cost-outs
- Put the cost reductions into a relevant context
- Base the work on robust hypotheses
- Set up and plan the process
- Insist on tangible initiatives
- Plan the implementation
How to avoid the bumpy ride of poorly designed cost-cutting programmes
Oftentimes, cost-reduction programmes are poorly defined or inadequately orchestrated. The journey from an overall benchmarked savings potential to realised savings is too often a bumpy ride, driving the project to the pit – or even worse, weakening the structure of the company. The root causes are various, but with careful planning many crashes and detours can be avoided. The decisive factor is rarely that the cost base has been scoped wrongly or that there is a lack of underlying potential for cost reductions. The critical factor for success is rather how you design and manage the programme.
Up for a chat?
Contact Christian Sparrevohn by mail or at +45 31933193.