Implementing a cost improvement program can be straight forward, as long as one focuses on the program objective and remembers a few golden rules. One key rule is the appropriate communication of the program objectives to staff and employees.
More than the other stakeholders, the employees are critical to the success of the program. The implementation of cost improvement measures is key to realising the program targets. The ability of employees to influence this implementation should not be underestimated.
There is one dilemma though. Employees can be apathetic or suspicious concerning cost improvement programs. This comes firstly, from the fact that many companies have previously tried to “cut” costs, often in a chaotic way and not achieved the target. Secondly, cost improvement, can also be interpreted as cost reduction leading to fears over job security.
Continuous Cost Improvement seeks to improve efficiencies and indeed productivity. There are many possibilities, and headcount reduction should not be at the top of the list.
Making the employees aware of the cost improvement program, and its objectives will offset fears, create an understanding of the need and inevitably lead to a better result.