How to cut costs in a recession – with help from employees

Jon Katzenbach (Senior partner of Katzenbach Partners LLC, is the author of several articles and books, including The Wisdom of Teams)
Paul Bromfield (Principal at Katzenbach Partners, developed the Motivating Cost Discipline approach with colleagues at the firm)

Strategy & Leadership

ISSN: 1087-8572

Publication date: 8 May 2009

Abstract

Purpose

The economic downturn requires prudent cost reductions, yet only 10 percent of companies sustain cost reductions after three years. Some of the most successful cost cutters have learned to engage their workforce to embrace both the rational and emotional arguments for taking action and to focus on what the company is and will become. This paper aims to investigate this issue.

Design/methodology/approach

The task of securing employee commitment to cost reductions is not easy, and requires paying close attention to six principles which this paper introduces. This is referred to as the motivating cost discipline (MCD) approach.

Findings

In the example application of the MCD approach, costs were cut by 30 percent with employee satisfaction and price lifted 20 percent.

Research limitations/implications

The six principles offered are collected from observing best practice in the field.

Practical implications

This paper shows that beyond the mandate to an immediately lower cost structure, it is also possible to motivate people in positive ways that produce emotional as well as rational commitment.

Originality/value

Contrary to conventional wisdom, it is possible to get more costs out sooner and realize benefits that are more lasting; the secret is fully engaging employees in the cost cutting process, which this paper helps to do.

Keywords

Citation

Katzenbach, J. and Bromfield, P. (2009), "How to cut costs in a recession – with help from employees", Strategy & Leadership, Vol. 37 No. 3, pp. 9-16. https://doi.org/10.1108/10878570910954592

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.