By Doug Hudgeon The Cost Management Tip As I’ve planned my upcoming tips, I’ve been pondering which tip will be the most important. I now think this is it. You cannot reduce cost in your organisation unless you assign a single person the task of, and regularly hold them to account for, improving each cost line – and if you have to change your chart of accounts to do so then do it. Who you select as the responsible person for each cost line will depend on what you want to accomplish. If your cost reduction programme is urgent and necessary for your corporate survival, you should assign responsibility to a small group within Finance who are solely focussed on taking cost out of your organisation. However, if you are looking to improve operating efficiency as an ongoing practice within your organisation, you should assign responsibility to front line managers. Building a cost conscious culture requires empowering your managers to impact cost and valuing their success at doing so. Your managers must see themselves as personally responsible for cost reduction. Related web sources The bystander effect is well researched social psychology phenomenon. It was first studied following the killing Kitty Genovese in 1964 where her neighbours failed to intervene in her murder because they thought that someone else would. Whist this interpretation of that incident is probably flawed, you don’t want your company to die because your managers were all bystanders. Doug Hudgeon who is lawyer and vendor management professional who has branched into finance and accounting shared services management.
September 7, 2011
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