Cost-cutting is a good thing. Right?

If you were not directly impacted, you would likely know someone affected by the sweeping 2023 cost-cutting measures.

In Singapore, in Q2, 3,200 people were retrenched, down from the 3,820 who lost their jobs in?the first quarter of the year, with?business reorganisation and restructuring?continuing to be a top reason for layoffs.

As reported by?Channel News Asia, Grab Chief Executive Anthony Tan said the cuts made in Q2, the biggest since the start of the pandemic, were not "a shortcut to profitability" but a "strategic reorganisation to adapt to the business environment."

However, as commented in the HBR article,?Cost Cutting That Makes You Stronger,?"When cost-cutting programs are implemented in haste, as many of the current ones have been, there is little (if any) debate over the strategic intent behind spending." In the same article, the authors identify five keys to ensuring that companies build an efficient, effective culture around costs that works in both good times and bad.

Here, we share our key insights from the article and draw on our recent experience as an HR advisor to start-ups and scale-ups in APAC.

Put cost management front and centre

Make discussing budgets in-depth the norm for all layers of management and build cost management into the company's culture.

By putting discussions regarding budgets and costs front and centre, you can encourage employees to waste less, offer solutions, and promote cost consciousness even when nobody is looking. Think and act with a business-owners mindset.

Create a culture and a process for managing costs and avoid cost-cutting as a one-time reaction to a slowing economy.

Always look at the business holistically

Avoid focusing line by line and take a holistic look at the business and how each part relates to and impacts future growth.

How can you simplify? What can be automated? What can generate savings to fund the growth of other areas?

"One way to get a better perspective is to imagine a new competitor arriving in your segment without the burden of all your past decisions. How would it compete? What products, activities, solutions, and services would it create? How would it simplify the customer offering to create the highest value?" - HBR

Lean on an ecosystem of partners

A benefit of the tech ecosystem is that it is highly networked. Building internal teams and developing new capabilities is costly and requires a talent model that accommodates career paths and skill development.

Lean on your ecosystem of partners while likely having greater knowledge, skill, and scale in some areas than you have on your own. Outsourcing or using fractional people models capabilities allows you to focus your time and investment where it matters.

Unfortunately, cost-cutting measures and layoff announcements tend to come as a surprise for those impacted. Decisions feel rushed, communication can be vague, and emotions run high. By ensuring that you build an efficient and effective culture around costs that works in both good times and bad, you can avoid having to make hasty cost-cutting decisions that negatively impact your brand, team morale, and growth.

Cultivate is the Recruitment and HR partner for fast-growing companies in the start-up and scale-up space.?We fill a void left by others; approachable fit for purpose solutions for Founders, Leaders, and Investors in the Tech sector.

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