A recent survey we completed with our Partners RSM indicated that:
- 70% of Finance Directors are planning to reduce costs
- 50% of Finance Directors said that they had experienced similar cost reduction programmes
- 45% are planning to use external advisors to help train and support staff in cost reduction
- The biggest motivators were protecting margins and pressure from the board
- Over 80% of RPs were aiming for an efficiency increase of more than 5%
- Over 30% of RPs were aiming for an efficiency increase of more than 20%
However what many didn’t know was that on average companies are only achieving 59% of expected savings and just 8% reach or exceed their targets.
To date our assessment of RP’s cost reduction plans show some worrying patterns and similarities to other sectors which are included in the above…
- Recruitment freezes
- Non-discretionary spend budget reduced
- Financial contingencies used
- New build programmes re-profiled
- Component life cycles reviewed
- Risk of “slash and burn” / blind staff cuts
- Short term thinking
Plus plans that are either unachievable in the timescales set out or unachievable full stop.
We can provide you with an assurance review to check that your cost reduction plans are built on solid and sustainable foundations.