Establishing strategies and targets for cost reductions are an important first stage in any transformation. Our Chief Executive Tony Bryan explains why stopping there is a mistake:
Many housing providers have established their strategic plans and cost reduction targets to meet their business plan requirements. This has typically taken place at a high level within the organisation led by finance with senior operational involvement.
Our research with Finance Directors across the housing sector suggests that many of the ‘cost reduction’ initiatives are failing to truly change the way that they operate due to a number of different circumstances:
- Recruitment freezes
- Slashing of discretionary spend and social value offerings
- Financial contingencies used
- New build programmes re-profiled
- Component life cycles reviewed
- ‘Blind’ staff cuts
Some key questions are:
- How are we going to make a stepped change from the way that we have been operating? (often with a lot of the same staff that had operated under the ‘old’ model)
- Have we really engaged with the staff who are delivering the core services to deliver transformational change? (outside of a one off style request)
- Can we genuinely link our business plan savings targets to our actual performance measures and decision making on the ground?
- Are the areas that we have targeted for cost reduction true ‘cost savings’? If not, what happens if another wave of financial challenges comes our way?
- Are we actually being ambitious enough in establishing our cost reduction targets?
Our experience in helping organisations to both develop and actually deliver cost reduction projects through to full scale transformation projects means that we can help you to establish the right plan for your journey. We’ll align your strategy with your cost reduction plans AND importantly help to change behaviours on the ground.
See how we did this for Broadacres here:
Making the savings stick:
Chart source: RSM