Creating a cost culture is about more than mandated measures and top-down initiatives. It requires everyone in the business to be fully engaged, cost-conscious, and pulling in the same direction. Across the board, our research has uncovered three main challenges undermining many companies’ efforts to embed a cost culture:
Our survey finds that frontline employees report the lowest level of cost-consciousness, particularly in comparison to senior management and middle managers. But any cost-management effort that isn’t adopted by employees is destined to fail. So it is critically important that all employees – from the frontline workers through to senior management – be aligned in the cost management process.
- 70% of Senior Managers said they had put forward an idea for improved cost management within the last six months but only 45% of frontline workers said they had.
- 62% if Senior Managers report having cost effectiveness measures written into their objectives this year while only 42% of frontline workers agreed
Respondents tended to have a strong level of strategic clarity about the cost-related goals of the business, and how cost management relates to business success. However, they were much less positive about their perceived ability to suggest innovative steps to transform cost management practices or to take action on issues related to managing cost. Your employees may know what is expected of them in a cost-conscious culture, but many do not feel empowered to take appropriate actions.
- 88% of respondents understand how their job objectives relate to business objectives, but only 54% of respondents could boast that their organisation had created cross-discipline task forces to develop new ideas.
When comparing the respondents’ levels of understanding the strategic intent of the business, versus the reported capabilities, it quickly becomes apparent that a wide gap exists. Organisations will need to properly equip their employees with the right tools, skills and capabilities to enable them to effect real change in the cost base of the business.
- Only 55% of respondents agreed that their reward and recognition is clearly linked to the cost management activities with which they are involved.
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