Consolidating back ups

Incremental ideas with minimal impact on other departments can allow you to trim up to 10% of costs. The first is usually easy to spot: These workers spend the most time in the halls. Perhaps their jobs were made simpler by the new online HR or finance system a year ago, and new duties were never assigned.

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Second, the degree of organizational disruption caused by your reductions will usually be proportional to the degree of cutting you do. After you have exhausted the common ploy of claiming cost savings by leaving vacant positions unfilled, you should restructure the jobs of any less-than-fully-busy people and confront the problem of underperformers.

Therefore, you should tailor the reductions you pursue to your savings goal. You’ll find two types of less-than-fully-busy people.

The following kinds of reductions are most common: 1. The company had spent millions of dollars making the sales process more efficient, yet sales did not grow.

We discovered that the officers devoted their freed-up time to better serving existing customers and reading up on new products—but not to phoning customers and selling (which they enjoyed least).

You can also rank each overhead item from most effective to least and draw the cutoff at the point you consider acceptable.

This same standard should be applied to many activities not traditionally recognized as overhead.Determine which parts of your department are performing essentially the same tasks they were a year ago.Those parts probably don’t need the level of supervision they once did.Line supervisors and senior executives may not like being classified with finance and HR staffers, but for this purpose, they should be. Finally, overhead that constitutes an investment in growth should be looked at on a net-present-value basis—just as other investments are.If the anticipated profit is high enough to justify the bet you’re placing today, the overhead gamble is worthwhile.We taught the bank to offer branch managers a choice each time it implemented a labor-saving innovation: either combine jobs and reduce head count or raise the branch’s sales goals by a commensurate amount.

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