I remember a newly appointed Head of Finance in our first meeting, after he had been in the job a few days, saying to me "I’ve worked out where you can save a load of costs - you’re spending too much on associate consultants. I'm going to recommend to the CFO that we reduce the budget by 50%." I asked him if he knew why we used associate consultants and he said he didn’t but he did know that it was too much. I then asked him how much time he had spent with the consultancy teams trying to understand the way they worked and if had he reviewed our cost-to-serve model. "None" and "No" were his answers. I applauded his enthusiasm. I said I understood that he was eager to impress his new boss and wanted to make his mark by achieving some quick wins but he was genuinely surprised when I told him that I found his suggestion disrespectful. I said I needed a Finance Business Partner to help me manage costs - not somebody who just rolled up and proposed arbitrary cost cutting exercises without any context. Tough love perhaps but too often in the past I'd seen short term gains leading to long term pain. Thankfully, I'd been blessed with some great business partners over the preceding years within that organisation and I knew the business couldn't afford to reverse the trend. Severe arbitrary cost cutting is deceptive and counter-productive - it will almost certainly damage your brand and, paradoxically, put more jobs at risk. One of my old bosses used to call it "lazy management" - managing the numbers, not the business. Anyone can cut costs but managing them is a skill and it doesn’t have to be painful. Some organisations default to major redundancy programmes to control costs. I've never lost sight of the human impact of redundancies so I prefer to minimise them by managing costs on an ongoing basis. Here's my slide summarising the key actions you can take. Going back to my first story, we didn't reduce the associate consultant budget by 50% but we did improve the cost-to-serve, enhance the customer experience and raise intrinsic motivation levels. And the Head of Finance? It was an ongoing battle (after all this is a true story and not a fairy tale!), but it became easier over time as he started to see the long term benefits. So, when it comes to costs - don't flatten to deceive, manage them to achieve! Please use this link to check out my full article on LinkedIn: https://www.linkedin.com/pulse/cost-management-dont-flatten-deceive-jon-stephenson

1. Jon Stephenson
https://uk.linkedin.com/in/stephensonjon
• Invest in cost management – over-resource and build-in time to consider smarter ways of working
• Develop cost-to-serve models – give operational managers the accountability for improving them
• Optimise individual performances – measure, understand, and address their causes of variation
• Tackle the waste in your operations – reduce failure demand and redesign inefficient processes
• Streamline your value work – automate or simplify it, and empower your customers to self-serve
• Address the reasons for your negative churn – consider whether leavers need to be replaced
• Manage attendance consistently – ensure you treat everyone fairly
• Embed a continuous improvement culture – encourage ideation
• View suppliers as partners – seek value from long-term relationships
• Don’t avoid difficult decisions – act when you need to, but consider
upskilling or redeploying your people as genuine alternatives to redundancy
Cost Management – don’t flatten to deceive!