Balancing cost management
Adjusting to the new economic climate may tempt you into focusing on additional cost cuts or consolidating pandemic changes to manage cash flow and finances. But bear in mind the law of unintended consequences before you get carried away with savings.
The impact on business quality and, of course, employees is key. Measured, early action should help to avoid more drastic measures if your cash position deteriorates.
Customer experience can easily be adversely impacted when the finance or accounting department is driving cost savings. Making these decisions can be tough, and it is all too easy to prioritise internal operations over customer service. However, this could be an opportunity to outshine competitors who have neglected their customers by, for example, trimming back after-sales services.
Staff perks may seem an easy target, but you should consider the impact on morale and efficiency. For example, free drinks and snacks mean that employees are less likely to leave the premises during breaks, and they will be more inclined to work late if there is an urgent job to be finished. And cutting the quality of workplace refreshments, for example, can be a false economy, leaving colleagues feeling undervalued when basic pay rises may also feel the squeeze.
Centralising spending may allow a tighter control over budgets, but decisions may be made with outdated information and with little awareness of local needs, creating discontent among both customers and employees delivering services. Front-line staff who see their decision-making powers removed can become demotivated.
Cost cutting definitely has a role to play but needs careful planning and consideration of all the potential implications.