Sustainable cost reduction continues to dominate executives’ agendas. Our research into how effectively companies are managing costs reveals significant variation across sectors – with great potential for improvement among those at the lower end of the scale.
Cutting costs is at the top of the agenda across most sectors, still, many firms just don’t not how to do it right
Taking costs out of a business is hardly a new phenomenon. It is reasonable, however, to say that cost reduction is often a reaction to a specific market or managerial need, rather than a planned intervention. This is borne from relatively low maturity in optimizing cost and investment in many sectors, despite years of cost cutting. Consequently, sustainable cost reduction continues to dominate executive agendas.
Managing costs is more important than ever
The biggest challenge for companies is establishing structured and skilled approaches
Companies are struggling to establish structured approaches and carry out profitability programs. Surprisingly, lack of subject matter expertise is one of the main impediments. Lack of standards and the absence of clear targets – including rigid progress tracking to achieve them – compound these shortcomings, consequently leading to poor morale and lack of individual employees motivation.
If cost cutting dominates most companies’ agenda why are so many struggling to deliver performances and at the end savings?
What is the key to becoming a cost-out performing leader?
Looking at the situation from a different perspective, one can identify dominant success factors at companies that are doing better than others. A closer look at companies with high maturity in profitability programs, shows the main success factors:
- Clear focus on skills & competencies
- Provide & train dedicated resources
- Establish a transparent process
- Celebrate achievers and sanction shortcomings
- a proper tool setup
Outside in view: Primary causes for high performances
Our answer to achieving best practices is driven by six dimensions
Experience from running a multitude of profitability program projects has helped us identify six dimensions for stepping-up to best practice.
- Run a health check to identify the main weaknesses
- Define top-level actions
- Set up a dedicated project team and involve all stakeholders
- Establish a cost-based reporting and Project Management Office
- Define content support and focus action fields
- Inject profitability approach
What comes after the Health Check: The key is to orchestrate all dimensions of a successful Profitability Program in order to reach best practice
What do Tsetinis Profitability Programs deliver?
The need for fast and structured Profitability Programs is evident. The question is now how to inject best practice into companies. Interested? The answer could be as simple as that: Get in touch with us and let‘s discuss how we can help establish our proven concept within your organization!