Cost-cutting creates leadership vacuum

By Eric Denniston, Change Architect, Denner Group International

Takeaways: Eliminating jobs as a way to reduce bottom line expenses often results in a leadership vacuum with high level managers being let go. Those left behind have reduced morale and often lack the necessary expertise of the leaders who are no longer there.

When a downturn in the economy occurs, such as what happened in 2007, many companies respond with a knee-jerk reaction by cutting jobs as well as budgets. While this may be necessary, too often what has happened is that executive management first looks at the highest paid employees and offers them an early retirement package. Then they move to the next level of salaried managers and eliminate them.

As a result, these firms face a lack of bench strength in terms of middle managers who know the business and can quickly help the company get back on its feet as the economy turns around. There may be a wide gap between the staff and the executive team that are left, creating a serious leadership void. Consequently, morale may plummet, with those who are left waiting for the other shoe to drop and wondering how safe their jobs are. This prevents them from focusing on their work which is crucial to helping the company progress.

What can be done to turn this around? One of the things is to focus on employee culture and look for ways to empower your staff to take an ownership view of their jobs. It can’t be mandated, but there are creative ways to reward your people for helping to find even more ways
to eliminate bureaucratic waste – without cutting jobs.

Cut Unnecessary Processes

Look at the processes in your business. Are they all necessary? Are you doing things because they’ve always been done that way, or are there opportunities to change or eliminate some processes altogether because they’ve become outdated or irrelevant? It’s time to take a hard look at where you might uncover some hidden costs and discover new-found savings.

For example, is it really necessary for every manager to have their own printer? What would be the cost savings if you networked a few printers instead? In addition to the cost savings in having fewer printers to support, the exercise each manager would get by walking from his/her office to the printer and back would be beneficial and give them a short respite from their work.

If you use color printers in your organization, did you know there’s a simple, inexpensive, retrofit product for HP printers that will force the printer to print in black and white instead of color and to print two-sided instead of single-sided? How much could you save in paper and ink on an annual basis by installing that device on all your color printers?

Those are just two of the creative ideas participants have gotten from attending a two-day workshop we lead. Some participants found as much as $2.5 million in cost savings annually!

Impressive results!

While it may be possible to organize this process internally, it’s often beneficial to bring in an outside, independent facilitator/consultant who can coach and guide the process. The results are most impressive when a cross-section of your staff (between 25 and 30 at a time), from senior executives to the lowest level person, participate in a two-day, offsite retreat.

During the two days, each person works individually and in cross functional teams of two or three to look critically at the work they do every day and write down non-essential tasks they perform that could be done differently or could be eliminated or transferred to another department where it makes more sense.

The consultants establish a safe environment that encourages creative thinking and rewards cost savings suggestions. Executive management is required to immediately approve, decline or request more information on each suggestion participants make. Every client that has done this has averaged $40,000 per person in immediate cost savings, without eliminating jobs or adding any new investments in equipment, software, etc.

Total annual cost savings are averaging more than $1 million per company and sometimes much more. Plus, morale has improved. People feel valued. Their contributions are being heard and rewarded, and the long term benefit is a shift in culture from one of entitlement or fear to one of ownership and accountability.

Now may be the right time to try something radically different. What have you got to lose?
Contact us for a free estimate.

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About Jeri Denniston

Jeri Denniston is a certified Strategic Management Professional with proven performance in strategic marketing, social media strategies, management, public relations, and business planning. During her career she has mentored and trained co-workers and staff in communication and leadership skills, facilitated board and management retreats, led workshops in strategic management and systems thinking, and directed strategic planning projects for the development of new products and markets in the financial, marketing information and publishing industries. Skilled in digital marketing, she teaches internet marketing and social media & mobile marketing at Yavapai College. Jeri's language skills include high level fluency in Spanish and proficiency in French. She has a masters in international management from Thunderbird School of Global Management in Glendale, AZ.

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