Communicate for a Cost Reduction Culture

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In many organizations the mere mention of cost reduction causes ears to prick up and rumours to circulate. Somehow, the conspiracy theorists associate it with job losses and conjure up bad omens for the future.

But intelligent cost reduction is about generating profits by eliminating waste. Cutting jobs is always a last resort, regardless of the prevailing business climate.

So, how do you reduce costs without reducing morale? How do you prevent negative water cooler gossip and make your staff see the benefits of your strategy?

You communicate.

Carefully considered, ongoing, open communication about the nature and scope of cost reduction initiatives engenders a culture of tolerance – if not enthusiasm – for efficiency within organizations. When you identify the benefits clearly and show a direct positive impact on working life, you preempt criticism and give people the opportunity to support you.

Here are some ideas that might help you communicate effectively with your organization:

• Don’t limit the scope of your cost reduction initiative to the extent that it might appear you are singling-out particular individuals, job functions or departments that have not controlled their costs.
• Be honest about why you are cutting costs, if possible.
• Send a note to everyone in the organization. Tell them your strategy is to maximize profits by being efficient in all areas. Be clear that cost reduction needn’t affect day-today operations.
• Use your bulletin board, if you have one, to solicit ideas and feedback. While you must remain firm – you are not asking for permission to reduce costs – it’s hard for your critics to justify negativity if they have not taken the opportunity to have their say in an open forum.
• Consider incentives – financial or otherwise – to reward contributions to cost reduction schemes, or to share savings for a limited period.

Finally, if you are using a third party to help you reduce costs, ask for help with your communications. A good cost reduction firm will have seen and dealt with plenty of internal politics and will know how to handle your specific challenges.