Finding ways to cut costs and improve productivity can sound like a large and complicated project that will require a task force and take months to complete. But it should not be that way.
We believe that most organizations can reduce expenses and/or increase productivity by as much as 10 to 15% by following a quick and simple process, as long as certain principles are in place.
Reducing expenses and increasing productivity can be accomplished by a combination of:
- Finding and eliminating activities that do not contribute to your economic engine.
- Streamlining and/or automating processes.
- Employees working more efficiently together.
It is very possible to do all three of these things quickly, when these principles are in place:
- Employees feel ownership in the organization’s success.
- Employees feel they are important and appreciated contributors to the organization’s success.
- Employees do not feel threatened by finding activities that can be eliminated; i.e. if people think they need to preserve their job functions in order to preserve their job; savings will never be found.
- You know the key indicators that contribute to your economic engine. For example, for hotels, it could be debt per room; for professional service firms, it could be billable hours and margin per billable hour; for farmers, it could be debt per cow. Whatever these indicators are for your business, everyone should know and understand them.
Assuming these principles are in force in your organization, you are ready to follow this process to find as much as 10 to 15% in cost savings and/or productivity improvement.
- Charge every department (engaging everyone in the process) with finding ways to cut costs and improve productivity.
- Give them three days to do so (with some lead time). This is enough time to take a hard look at operations (because most employees will have ideas already) while still moving quickly. Give people the time they need during the three-day period to do a quality job with this task. If the endeavor simply doubles everyone’s work load; the results will not be as effective.
- At the same time, ask all departments to assess if their department goals are aligned with organizational goals and if everyone has the information they need to do their job.
- When the results are in, engage in a one-day triage effort. That is, in one day, 1) decide which recommendations should be implemented immediately and empower the appropriate people to do so, 2) decide which recommendations should be explored further (such as system upgrades) and assign an owner to each, 3) decide which recommendations will not be pursued.
- Communicate and celebrate the outcomes with everyone.
If you have any questions about this white paper, contact Mike Vann at the Vann Group. The Vann Group is a business advisory firm that assists companies in transition to unlock their value. We provide practical business counsel to transitional companies through a customized approach that is founded upon our passion for business and our family′s 150+ year entrepreneurial track record. No other firm can provide the breadth and depth of services like the Vann Group, including strategic planning and business development, merger and acquisition advisory services, leadership succession planning, organizational development consulting, and crisis and turnaround management.
