Cutting Costs

[scott]

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?

[Island Girl Agent]

Thanks, Scott, I agree wholeheartedly with your comments here...micromanaging producers is not the road to success. I know this is an old cliche, but thinking outside the box is really what we have to do right now with the economy moving in the direction it's going...how can we streamline, how can we do even more to embrace technology...you hit the nail on the head. Thanks.

[Big Dog]

Having worked for a broker (Aon) that has focused on cutting costs only for the benefit of the stockholder happy, the level of service that they provide to their clients is abismal. They've outsourced almost all of their IT and backoffice (i.e. Aon Client Services) to India, and continue to receive complaints from both the field office and clients.

True, there is a lot of waste in expenses, but much of this came at the middle/upper management level. Whenever a business focuses on controlling expenses and not on serving the client, they lose focus, and also run the risk of losing employees.