Intruequest Idea Exchange

Tuesday, February 14, 2012

THE HIDDEN COST OF CUTTING COSTS

In hope of spurring a useful conversation, I'm sharing something that has been on my mind a lot lately.

Along with all of the trimming of resources (people and dollars) that are occurring, I see so many hidden costs.  Reorganization efforts are implemented one right after another, and people never get acclimated to a new role or place. What does this disorientation cost?  People quite naturally protect their "turfs" and these tensions between individuals or groups are never resolved. What does this protectionism cost?  Goals are in contradiction across parts of the organization and alignment is never addressed.  What does this misalignment cost?  Trust doesn't exist up and down and around the organization to support the flow of desperately needed new ideas or information.  What does this hesitance cost?  Key talent leaves and no one is able to fill the role(s) due to diminishing investment in training, development and coaching. What does this gap cost?  

I believe the hidden costs are HUGE and could easily undermine other well intentioned cost cutting efforts.  Do you agree or not?  What hidden costs do you think about these days? I would love to know your thoughts.  Post your ideas, comments, or reactions. 

2 Comments:

Anonymous Jeff Wright said...

Great points! There's a lot more to having the right resources (and the right mix) than just the bottom line.

March 6, 2012 at 10:17 AM  
Anonymous Kate O. said...

Thanks for your timely post. I read it with considerable sadness because many of the thoughts you shared resonates with the reality in my organization (work place). Turf tussles; protectionism; misaligned goals; deep seated suspicion or complete lack of trust which invariably stifles new ideas and growth; juicy early retirement packages given to staff who leave abruptly with no proper succession planning in place; endless learning curve for new entrants; need I go on?

All of these really trigger in my mind, a picture of deteriorating standards or quality. For a huge organization such as mine with over 10,000 employees worldwide - that is definitely a huge hidden cost. A cost which could subtly and quietly erode its reputation over time if not addressed promptly.

Thanks for flagging this food for thought. I think it is time to let down the silos, think of the longer term, think continuity and sustained effectiveness, align the micro with the macro - the hidden cost has now become an elephant in the room that must not be ignored.

March 6, 2012 at 10:25 AM  

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