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Count every cent

WELL It’s time to face it. You take the most pessimistic analysis of the global economic situation and we’re in for tough times. You take the most optimistic analysis of the global economic situation and we’re in for tough times. Got it? Don’t panic. Think. Act. Expect nothing. Prepare for anything. At it’s most basic, the world population of nearly 7 billion people still needs to be fed, watered, clothed, sheltered and transported. Consumption will decrease, but it will still go on. Many of the 4 billion ‘have nots’ are still driven to be on the fun side of the money gap. The world won’t end. World governments have already acted to accommodate the greed and short-term thinking and the failure of the regulators that have created this situation. I read that the economic indices of today are actually far worse than the same indices of the Great Depression of 1929-33. But today the world is a vastly different place with very different means to deal with this situation. So, before you cut costs by getting rid of people, involve your people in finding ways to reduce costs. Managers can’t reduce costs by themselves – they need the assistance of their staff. The trick to reducing costs, without pain, lies in gaining agreement from all stakeholders that there is firstly, a need to do so and secondly, a willingness to take actions to reduce costs. Part of this process is through consultation with, and the education of, these stakeholders. • Discuss and agree will all stakeholders the reasons for and the benefit of reducing costs. • Discuss the benefits of reducing costs to the organisation and individuals. • Explore the attitudes that people have to the notion of reducing costs. Discuss them and ask, “are there better attitudes that we can adopt which will serve us better?” • Brainstorm ideas with staff about ways in which costs can be reduced. • Identify and discuss major overhead costs and areas where excessive costs are evident. • Explain to staff why cost reduction in an identified area is important and what the consequences are if costs are not reduced. • Establish a strategy to reduce costs and inform all staff of this strategy. Involve staff in developing the strategy. • Ensure that cost reduction will not result in adverse consequences to staff, customers or the organisation. • Begin implementing ways to reduce costs. • Inform customers of your intentions to reduce costs in the identified area and the reasons why this is happening. If the cost reduction is going to affect customer service, apologise for this. • Provide feedback about cost savings to staff and customers. • Inform staff where saved money will now be spent, i.e. other areas, debt reduction, capital purchase or new equipment. • Set targets as to anticipated and expected cost reductions and discus these with staff. • Monitor progress and provide feedback to staff about how the targets are going and what efforts have resulted in the most effective reductions. • Recognise and reward staff who make a concentrated effort to reduce costs. • Check that cost reductions do not adversely affect the day-to-day operations of the organisation by seeking feedback from staff in these areas

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