Should I bring in a cost cutting consultant to read the riot act?

Dear Aunty B,

I have just taken over as general manager of a medium-sized business and have had a huge shock. The staff have no discipline about sticking to budgets. They seem to think there is some magical money pot somewhere under a desk in the back corner because when I tell them it is not in the budget they say ‘well can’t we find the money somewhere else?’

They then suggest the most ludicrous things. Yesterday one of them said to me that if we could get a customer to pay a bit more for something then that could pay for the staff to spend extra on something else. When I tried to point out that that would blow the budget, he kept insisting it wouldn’t because a customer would be paying for it. When I tell the staff that this is not how budget processes work, they look at me as if I have two heads.

I have a lot to do, including increasing the revenue so we can stop operating in a small loss situation (which the previous owners were quite happy to do).

Running around cutting costs and trying to change this culture was not on my to do list.

Should I bring in a cost cutting consultant to read the riot act?

Exasperated,
Sydney

Dear Exasperated,

No, you should not. This is an extremely important issue and you cannot palm it off to a consultant. You have to set a new culture quickly and you have to lead it.

You say you want to be profitable and you are focusing on increasing revenue. Good. But cutting costs is the other half of the equation and getting staff to stick to budgets is ‘Elementary Watson’ stuff.

Here is what you must do. Sit the key leadership down and tell it to them straight. The quickest way to do this is to point out that the budget is final and if they go over budget it will have a direct impact on human resources, ie. someone will lose their job. Tell the staff that their KPIs will include sticking to the budget.

Tell your key people that it is up to them to educate their staff that the budget is a budget is a budget. Get your people to start thinking about how they operate in a cost focused environment. Get them to start thinking how can they do more for less? Is it necessary? If we outsource, can someone do it better for less? Can you introduce IT to do the job better?

When you overhear (as I once did) your staff calling you a stingy miser, then you know the culture is set and your job is done.

And that leads us back to your question. The problem with bringing in a consultant at this stage is first, you are the one who needs to change the culture or once the consultant leaves, all the problems will come back. Second, you don’t really know the ins and outs of the business as you are new. It will take some time to see where you can make the improvements. And it is the little cost cuts that combine to lift overall productivity – as well as sticking to budgets!

Good luck!
Your Aunty B

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