Cutting Costs
Posted: Fri Feb 08, 2008 12:58 pm
I just finished reading an article in the Insurance Journal that advocated cutting costs by exerting more control over expenses. The article used as an example a company that hired a CFO who required that all expenses over $100 be approved prior to incurring the expense.
My reply:
No business ever cut their way to success.
Making executives prior approve $101 expenses is just stupid. Wastes time and resources. The real cost of purchasing items doubles or triples under such a strategy.
If you can't trust your people to spend wisely, fire them.
Better strategy -
How can we improve the value we provide to our clients?
How can we make it easier for customers to do business with us?
What business operations should be outsourced?
What services do we provide that are not valued by our clients?
What activities should we stop doing as they offer no return?
My reply:
No business ever cut their way to success.
Making executives prior approve $101 expenses is just stupid. Wastes time and resources. The real cost of purchasing items doubles or triples under such a strategy.
If you can't trust your people to spend wisely, fire them.
Better strategy -
How can we improve the value we provide to our clients?
How can we make it easier for customers to do business with us?
What business operations should be outsourced?
What services do we provide that are not valued by our clients?
What activities should we stop doing as they offer no return?