"How can we extract further cost without affecting productivity or impacting customer service levels? How can we retain and develop key talent in this period of pay-cuts and uncertainty?"
Most companies have been through at least one cycle of cost cutting and it’s becoming harder to deliver sustainable cost reductions. Analyse what elements of your offering and product range customers’ value and for which they will happily pay a premium. Cut cost categories which will not support such a premium. Allocate ownership for every bucket of cost. Focus on a small number of key metrics to drive performance and savings.
People costs are often a company’s largest expense. Over the past number of months, natural attrition, pay cuts and recruitment freezes have become commonplace. As the focus increasingly turns to core activities, decisions on headcount can directly impact on short and long-term success.
During this process it’s also critical to maintain brand reputation and an external ‘business as usual’ approach. Identify core and non-core activities. Scale down where reductions are most appropriate and reinvest for growth in response to changes in consumer demand.
Unfortunately, we’ve seen employers implement workforce reduction initiatives without fully exploring the range of alternative options. If faced with having to take action, it is critical to ensure compliance with all aspects of legislation to avoid claims for unfair dismissal. Poor management will impact employee morale. Retention of key talent should remain a focus throughout and regular benchmarking is recommended.