Cost-cutting measures for troubled companies in these tough economic times

CostcutIn these troubling economic times, most firms are tightening their belts to keep those unnecessary costs down while we look to ride out this recession.  I used to charge $500/hour for dishing out this kind of advice, but I thought I’d give out some cost-cutting tips to Horses-readers as a gesture of economic goodwill:

1) Make all your senior managers and sales people fly Northworst.  You’ll be amazed at how many of those "critical" business trips go away….

2) Reduce the "on the road" food budget to $30 a day.  (Makes everyone order pizza to their rooms, rather than those terrible room service burgers);

3) Enforce a zero-tolerance policy on alcohol products to be expensed.  This will automatically reduce 25-50% from your bottom-line.  (Better than any outsourcing initative);

4) Send all your lowest performers on Six Sigma certification training.  They’ll either disappear from your payroll completely, or have a complete epiphany and start delivering the goods;

5) Seek out the cheapest, most desperate outsourcing service provider you can find and get them to take on all your messed-up HR, finance, procurement and customer service processes.  Hire a razor sharp sourcing attorney to include performance-levels you would never have dreamed possible – and which you would never have ever reached yourself in a million years.  Wait one year, do nothing, and they are guaranteed to have missed every single performance metric.  Now you can sue them for a small fortune for lost revenues that you would never have made in the first place.  Genious;

6) Sign a corporate deal with Red-roof Inn for any off-plan sales reps.  There is no better way to improve performance;

7) Completely refocus your entire business strategy on producing mind-numbing facebook applications.  You can’t go wrong, trust me.

Rr

Time to look at new means to lower those corporate costs -:)

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6 Comments

  1. Jim McDonald
    Posted April 11, 2008 at 10:37 am | Permalink

    Thanks for this Phil – made me laugh!

    To be fair to the Red Roof Inn… it’s not that bad -:)

    Jim

  2. Posted April 12, 2008 at 8:29 am | Permalink

    Nothing like meeting a group of NW execs on a Singapore Air flight trying to figure out how to do it right…now if they would only implement what they observed (or did they miss it?)

  3. Posted April 14, 2008 at 2:11 pm | Permalink

    These are great! While tongue-in-cheek and entertaining, also thought provoking.

  4. Mugure Mugo
    Posted April 15, 2008 at 9:51 am | Permalink

    Hi Phil,

    Great post!

    I was having my morning cup of coffee when I came across your post. Needless to say, I had a coffee-splattering moment when I reached no 5! (I am an outsourcing service provider). Had a good laugh.. great way to start my day :)

    Mugure

  5. Stephen Milford
    Posted April 15, 2008 at 9:53 am | Permalink

    Phil, while your suggestions are amusing, if you are at all serious, one must wonder why you hired such sales personnel in the first place. So perhaps first cost cutting is to clean house is HR. With the exception of item 4 none of the actions are likely to do much to see your company through tough times except to alienate employees.

    If your bottom line is driven exclusively by which hotels and what travel your sales staff undertakes, top management need to change. Frankly, if that’s the scope of changes a manager came to me with, I’d be looking to replace that manager — fast.

    I’d be putting all my marketing, finance and sale personnel through Karass negotiating training (if I hadn’t already done so).I am not affiliated with the seminars, so please believe me when I say that no other investment in your life will pay as large dividends over and over again.

    If I’m a public company…I’m going to try to readjust market expectations early. Get through the pain of sliding share prices early and let shareholders know we are using this time to focus on market position and evolving markets rather than profits. The market won’t like it, but quarter to quarter results expectations will be lowered and 10Qs will be less of an issue.

    Institute activity based costing systems and tracking and teach your people how to draw insights from it.

    Analyze your profit by customer. Visit and strengthen relationships with your highest profit customers (generally lower in sales volumes). Look hard at the service costs of your highest volume customers — especially ones who are at breakeven or loss on a fully loaded (incl indirect costs) basis. What must be done to change your cost structure to serve them profitably?

    Teach your sales and marketing people about the finances of the business and have your finance and accounting people go on sales calls — stop the internal bickering and get them to appreciate the jobs they each do.

    Go back and re-read Drucker and Deming. Re-read Deming again.

    Look for acquisitions that can be asset based acquisitions (ie small) that can be readily integrated.

    Have dinner every fortnight with your credit line bankers. Be positive in outlook but forthright on all issues and questions. For the ten working days before each dinner, note down at least two items per day (one for the morning and one for the afternoon) that you can state you have done to improve the situation. Never have less than 20 points to review.

    Tell your investment bankers to either accept positions on your board of directors or stop calling.

    Cut back on advertising and redirect the costs to public relations promotions.

    Find ways to partner your product/service with another business or businesses to co-venture a customer solution.

    Cut executive cash perqs and bonuses, especially status related perqs (cars, clubs, parking spaces, private planes, etc.). Put a long vesting stock grant plan in place that primarily benefits non-executive employees.

    Or, worst comes to worst follow the Dilbert pointy haired boss reecovery strategy:

    PHB: Our plan is to invent some sort of doohickey that everyone wants to buy.

    PHB (to Dilbert): The visionary leadership work is done. How long will your part take?

  6. jefferson faudan
    Posted April 18, 2008 at 1:00 pm | Permalink

    now you really have a sense of humor there… this made me laugh…but yes… i agree with you…cutting down on the budget means an inside job for companies to do…start with themselves for a better cash flow within the business and maximize to the optimum the needs of the company.

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