Revenues decrease, costs increase, budgets are tight so you make dramatic changes to improve the bottom line. Employees won’t be surprised and you make a conscious effort to identify rational decisions and not simply slash and burn. You still have to communicate and sell these cuts to staff.
Cost cutting efforts typically start from the top. Senior management or ownership looks at the numbers and makes the tough choices. Why include employees in such painful discussions?
Why not include employees in cost saving activities? They are the closest people to the operation and probably have ideas and recommendations that senior management will never think of. Including employees in these decisions inevitably helps communication, increases buy-in and the potential for success. When employees are involved in the process it also alters a spending mindset that extends past the tough times.
Employees don’t need to be part of the initial financial discussions to have an impact. Once budget decisions are made specific dollar goals can be given to departments and divisions. The head of the department can work with their team to create a cost cutting plan. The plans should require approval before implementation. The approval process provides an opportunity to explain business decisions and direction. Instead of rejecting a plan point the team in a different direction when they recommend a cut in customer service telephone support. The implications of the service change can be described as part of broad business goals.
I worked in an organization that successfully pulled through a business drought with involvement of management at all levels. With a shared economic goal every department worked to reach profitability. The experience left the company stronger with better processes and decision making.
Sharing cost cutting responsibility also decreases the stresses on senior management. They are no longer making decisions in a vacuum and guessing about management response. The same discussions generate ideas for maintaining existing customers and clients and identifying business opportunities.