Possibly. When Your Company Is Leaking Money.
Streamlining causes sleepless nights, and not only for the staff losing their jobs. If you are having to come up with ways of saving cash now, then take a pause and consider this. Where is your company leaking money? We know that head count reduction is a tried and tested method to keep a company from going under. There are costs associated with this strategy. When your company headcount or “realignment” strategy is done, and the dust has settled, what are you left with? A motivated, energized workforce, keen to deliver quality and rock-star performance? Or is the reality a two+ year tough uphill struggle of overcoming all sorts of unspoken fears, whilst internal dynamics are being worked out?
What is the cost of your head-count?
In the rush to execute (no pun intended) a headcount strategy, crucial aspects such as knowledge transfer, the cost of roles left unfilled, and even the impact on wider market confidence are completely overlooked. And yet many companies are so very keen to be seen to be “taking tough action” and start wielding the axe. Sometimes, change needs to happen internally. Sometimes we need to look at re-wiring our modus-operandi. Tough questions need to be asked and answered. How did we end up here? Why did we end up in a position where we are bloated with staff, and yet not achieving our objectives? Why are we spending, and losing so much money?
No Time Like the Present to Make a Difference
If the clock is ticking, now is the time to act, and take a hard look at where your company is leaking money. Chances are, identifying and controlling maverick spending within your organization can go a long way to redress the balance sheets in your organisation. Hard savings and efficiency benefits can be achieved of between 7-20% on the overall cost of contract spend alone. Say your annual spend is $200M, possible savings achieved through moving off-contract spend into compliance contract management could be anywhere from $2.4M per year upwards. Based on ABS average annual salary rates, that would pay for 30FTE’s. That’s pretty significant. And this is just looking at one small 5% savings opportunity across your company contract spend. On an annual spend of $200M, you can realistically achieve at least 12% hard savings by implementing efficiency strategies across the way you manage buying and supply chain activities. Enough to have an impact. Enough to stop and rethink your headcount strategy.
So before you wield that axe, take a breather. Assess the real cost of a head-count exercise. Take a moment or two to review where your company is leaking money, and how your expenditure is managed across your organisation. Because rather than showing your talent pool the door, perhaps the benefits, and opportunity lies in how you optimize the resources you have and controlling the way you spend.