Creating a Cost Cutting Culture
At the beginning of a new year, everyone in the industry takes a closer look at cutting costs regardless of how well they did the previous year. Generally we view cutting costs as more money in our pocket as long as we don’t negatively impact the value of what we deliver. Many of us look at cutting costs as a one-time event; you have two administrators that aren’t working very hard, so you dump one and give the other a raise to do the work load of the two. Or, you have traditionally spent 5% on marketing so you cut that by a third and save thousands. These seem like no brainers in the short term but in the long run can have disastrous repercussions. The one highly paid administrator will get burnt out as the business grows, or less new work walks in the front door as brand recognition drops with a cut in marketing.
Lean as defined in PLANET’s Crystal Ball Report #26 titled, Lean Management for the Green Industry, recommends a long term perspective on cutting costs. Instead of looking at what can we cut to put more money in our pocket, we ask ourselves how can we create a culture where all the players look for better ways to provide goods and services so that the client gets more for the same, and/or at less cost to the company?
The importance of this approach is if the company “team” sees that you are willing to fire one person when less busy to save money, then the players will view themselves as a risk and instead of looking for more efficient ways to do work, engage in busy work so they are not at risk. How many times have you seen a crew busy accomplishing less than needs to be done because they are not thinking about the big picture? Examples of this would be loading the truck so that the equipment and/or materials needed for the first job are in the back of the truck, trimming hedges after blowing debris off the lawn, dumping all the receipts into one “in box” without delineating who the purchases were made for, etc. “Busy work” and unconsciously doing things the way they have always been done are the biggest source of waste in any company.
In a “Lean” focused company, the emphasis is always on doing the work efficiently, but never at the expense of the client or crew. To do this, your team needs to know that if ten guys service the same accounts ten percent more efficiently, that rather than fire one of those guys you will use the extra time to look for more effiencies, and give the customer more value. Happier customers means more referrals and more work, eventually you will be servicing ten percent more clients with the same crew and making more money AND have a team that is engaged in the idea of cutting waste while delivering better service. Bonuses and profit sharing during those successes will help this process along of course.
There are many more examples and case studies that can be found in PLANET’s library of Crystal Ball Reports. If you haven’t taken a moment to browse through the 30 books, I encourage you to do so and find some new and lean ways of conducting your business.