Making the right cuts
David Williams and David Edwards take a strategic approach to cost reduction
Faced with the uncomfortable reality that cost reduction is a very urgent issue (rather than merely important), we see organisations behave in one of two different ways. The first group (which is, sadly, by far the largest) takes a reactive and short-term approach to reducing costs. Budgets get balanced by the imposition of cuts across all departments and services (irrespective of their importance), recruitment freezes, slashed programmes and activities, headcount reductions and a freeze on new projects (again, no matter how important). The organisation looks inwards instead of outwards, and a siege mentality develops. We also note that organisations in this category very often need to make further rounds of cuts. The outcome is an organisation in a spiral of decline and prone to death by a thousand cuts.
Author: David Williams
David Williams leads Grant Thornton's not for profit sector consulting team. His areas of expertise include cost reduction and value for money, options appraisals, financial management, service analysis and performance management. He is a chartered public finance accountant, and is an Audit Commission-trained Best Value inspector.
Author: David Edwards
David Edwards is a director in the Grant Thornton not for profit advisory team. His areas of expertise include: the design and development of efficient processes; organisational and strategic review; strategically aligned management information and options appraisals. David is a fellow of the Chartered Institute of Management Accountants, and an accredited Prince 2 practitioner.
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