Cutting Costs, Not People

Do you have a gut feeling that your company has a lot of cost-saving opportunities available, but you don’t know where to start? There is hope, and the process to follow isn’t rocket science. 

Dozens of turnaround CEOs have taught me there is a delicate balance to how much you can cut before you kill the patient. But on the other hand, most all of them have stories about the six, seven and even eight figures of savings they were able to find by implementing rational cost-cutting efforts. They would create cross-functional teams with representatives from across the company. The groups would be given checklists of typical cost-cutting opportunities. Then, they would spend time evaluating and reporting on opportunities for savings. 

I took those concepts to clients who were on the ropes and saw many a phoenix moment. For example, a $20M fifth-generation company with 110 employees was struggling to break even in a dying industry. The leaders were told by every consultant and board member to “sell!” But then, with a simple innovation process, we found $600K in incremental profits in just six weeks—enough to save the company. Years later, the leader of the six-man cross-functional team I set up ran into me at a Legion Hall. Over a beer, he shared the team went on to find $2.6M in profit improvements, and this team was the long-term salvation of the company. He said, “That was the most rewarding project of my nearly 30 years there.” 

But cutting costs can go too far. 

Jack Welch killed the long-term culture of GE and the company’s fuller potential through his consistent practice of axing the bottom 10% of employees. If you look at the market cap for which he was so lauded, it apexed a year or so before his departure. Then, it fell significantly—by a cool half trillion dollars—before he passed away a few years ago. That’s “trillion” with a “T.” Talk to those who survived Neutron Jack, and ask them about his tactic’s effectiveness over time and what it did to the culture. 

My team and I consistently find six and sometimes seven figures of improved profitability by taking prospects through a cost-cutting, profit-improving analysis. Full analyses can take days or weeks, but after just 45 minutes to 60 minutes, we often provide prospects with reports containing ideas that improve the bottom line by up to six to seven figures. We have dozens of modules, but taking a prospect through just a few is often enough to find these financially significant opportunities. 

Since 1990, my objectives always included creating and protecting jobs. I think the last place you should be looking to create profit is through cutting your most valuable resource—your people. Yes, we make hiring mistakes. That’s different. But as quality founder Dr. Deming was wont to say, “99% of the time, the problem is in the process, not your people.” 

If you are interested in protecting your people while building your profit margin, then my team and I would be glad to take you through a free 60-minute analysis to see if the report we build can lead to at least six-figure savings. Let’s save some jobs and grow in this time of economic turbulence. 

Protect your people, and the profits will come.

Mark Faust works with owners, CEOs and sales managers who want to grow their businesses. You can schedule a free growth ideas session with Mark. Simply book your time by visiting https://calendly.com/markfaust