Robust, progressive and forward looking companies are doing what is the need of the hour-managing cost. Efficient cost management includes spending where it is absolutely necessary, streaming processes and also cutting flab.
The big problem is that cost-control requires discipline and most firms lack that. They also lack the vision and the leadership that are central to this. It seems like every time one firm starts a cost cutting campaign another firm is ready launching a new campaign to cut costs. It’s not that it’s not a good idea and cost management is acceptable to all but the firms have to implement this with a sense of discipline.
For the HR team in any organization, cost management is an important target to meet, as it is for the marketing or sales division. It becomes a challenge for them to simultaneously manage employee expectations and costs. There is certainly no doubt about the fact that firms across sectors are taking proactive measures to manage costs better in times of stress. All things that were unlimited will now come under one cap. This is a good time for HR managers to come up with innovative ways to rationalize cost.
While cost cutting refers to a situation where companies stop certain internal activities or functions altogether, cost management translates into effective utilization of the resources available. In other words, it is an effective method to control costs and manage money for the benefit of the company.
When corporate houses decide to cut costs, it entails the sacrifice of business development and growth, as it is most likely to adversely affect the company’s customer service, R&D and technology. On the other hand, cost management ensures that the revenues available to a firm are smartly deployed. It involves short-term and long-term planning, and controlled decisions that increase value for customers and lower costs of products and services.
In lieu of the grim global business outlook, a lot of firms are consciously implementing cost management measures to enhance productivity. Besides the usual curb on travel, communication etc. firms are managing costs by delaying plans to lease new office spaces, freeze proactive hiring to avoid any potential overheads, etc.
Mindteck India is accelerating entry level training program called ‘Mindteck Academy’, to churn out more ready-to-deploy fresh engineering graduates. The company has also increased its focus on contracting employees.
The above measures will help them keep their expenses flat for next few months till the uncertainty passes away. Additionally, they are trying to seek out suggestions/innovative ideas from employees to manage costs and enhance productivity.
There are two cost management strategies that can be extremely effective. The compensation strategy which involves salaries based on fixed and variable factors. This means keeping the salaries at the basic level.
Many corporate are encouraging their internal employees to focus on training, and deliver above and beyond the client expectations; increased productivity will result in accelerated career growth for the employees.
No doubt this is a challenging time. It is also a chance for companies to connect with their employees and take innovative suggestions to manage costs without compromising on quality of work, and internal office activities. Through such an effort, companies can not only implement relevant programs to manage costs, but also utilize the platform to connect with their internal teams.
The planning and control of costs is usually inextricably linked with revenue and profit planning. If companies focus on cost management as a part of their regular business practice, the former will not be seen as a measure to tackle crisis situations.
Mindlessly cutting back on the distinctive competencies of the corporation in an effort to be “cheaper” will always erode the possibility of a sustainable future.