Cost Savings: Mission Impossible or Golden Opportunity
The recent announcement that the government will be requiring major programs to deliver between 5-10% cost savings from their operating expenses has created quite a stir. In fact, media reports are full of individuals and groups expressing their outrage at the expectations outlined in the Strategic and Operating Review (SOR).
I cannot say that I agree with the outrage. I have seen far greater cost savings delivered and the result was not the dire situation that some would like us to believe. I believe that cost savings, efficiency gains, and productivity improvements are all possible in any organization based on the belief that all performance can be improved if one desires to do so.
And therein lies the critical choice. Leaders may either choose to view the SOR as a mission impossible or a golden opportunity. The choice that they make will inevitably determine their level of success.
In May 2008 the Hay Group stated that: “Leaders that create the right environment in their teams enable their employees to give up to 30 per cent more effort. The reason is simple: employees who are engaged by the right kind of leadership, who have clear goals and feel recognized for their effort give more ‘discretionary’ effort (beyond that which their job demands) – and this effort flows through to the bottom line.”
And again three years later the Hay Group states that: “A positive climate can improve an organization’s bottom line by up to 30 per cent, and reduce absence rates and staff turnover. And up to 70 per cent of a team’s climate is determined by its leader.”
And leaders achieve their position within an organization through their attitudes and daily actions. They are positive role models who inspire their team to do their best work. They show commitment and make themselves available to their team. They are present throughout the good times, but are even more present in the difficult times.
And they understand that improving efficiencies implies that base level efficiencies are known and measured. So they put in place systems to integrate and review work performances on a transparent and consistent basis, not just when required to do so by the SOR.
Remember, according to the Hay Group: Employees who have clear goals and feel recognized for their effort give more ‘discretionary’ effort … so the answer lies in some basic management principles. In short, organizations need to improve their integrated operational planning and performance results reviewing, and better align their vertical and horizontal communications. It’s a matter of better understanding the work that their people are doing, and driving out the non-value associated with it. More value-added work will get done and all Canadians will be the beneficiaries of streamlined service delivery.
But we’re getting ahead of ourselves. The first step is for Senior Representatives to commit to leading the transformation process. I hope that they recognize this challenge as a golden opportunity to improve upon some basics. And by doing so, they can set a more positive tone in the workplace. And this will not only deliver the required levels of cost savings, but also improve staff morale, which, after all, is a far greater threat to achieving and sustaining any results.
Kathy Roy has implemented business transformation and change management projects in complex organizations for over two decades. She has worked with major companies, both public and private, and with numerous business sectors in both Canada and the United States. She is part of Systemscope's Strategic Business Consulting practice.