Next

Part - II

Then the question is, what it means to cut costs rightly?

Right cost cutting simply means identifying where flab exists and finding more efficient means of getting same task carried out while finding innovative cost solutions. It has to be clearly established what are the goals of the company, and how are operations connected to meet those goals. Strategic initiatives should remain where they stand on merit because on them depends the future life of the company.

The exercise of budgeting and cost management should bring out best out of professionals working in company and fill them with sense of achievement. That will happen when they will be given freedom to choose, suggest, and implement things. They should be asked for innovations in getting an activity better done and to see what can they do on costing front. They will themselves come out with great ideas. On the contrary, when good initiatives in budget meet cold shoulders, CEO remarks, "Reduce training budget by 15%'" or CFO says, "Company cannot afford things so budget is rationalised 15% all across," and professional thoughts get damaged and hurt. They then simply put a number and give it back to the company. Budgeting with this reactionary thought process is very harmful for the organization. This has brought more demotivation into system than doing any good. This will affect other sub-systems in company as well. Because at the end of the day, we are dealing with people.

Perspective of change should be properly set. Most common sight is CEO saying following words in a general meeting, "Earlier we were the only player, now many competitors have come. They are offering product better than ours at lower prices. We need to cut costs." My dear CEO, has ever thirst extinguished by tasting dew? If competitor is offering low priced better product, then is it to be countered by technological superiority or through cutting costs on tea and snacks? Why top management fails in anticipating this and steering the company ahead well in time towards retaining competitive advantage. Point is perspective of change should be rightly set? If cutting costs help, then only this exercise should be initiated. There is negativity associated with this process.

People should be involved properly. One issue is, whether people are involved, another issue is whether they are rightly involved and to what extent. If in change process involvement is on the basis of power centeredness, things fail. Involvement has to be according to requirement and need of the hour, competencies, and what value one is capable of bringing to the table. When most of the people are involved, they own the decision. Change happens.

Concluded.

* Contributed by: -
Dhyan P. S. Chauhan is an alumnus of Delhi School Of Economics and working with TechBooks as Manager-HRD.