Efficiencies and Cost Savings Post Covid
Dave Parkin
Transformational Leader - Management Consultant, specialising in Consultancy, C-Level Advisory, Transformation, Behavioural Change, and Managed IT Services
Introduction
Due to the outbreak and spread of the Coronavirus from China, on March 23rd 2020, the UK went into a nationwide lockdown. Almost every facet of our everyday lives was affected, flights were grounded, shops closed, churches stopped having services, public transport services were reduced and new terms appeared in relation to employment e.g. furlough or ‘being furloughed.
Financially the UK government underwrote businesses by paying for their staff to be furloughed.
As life slowly starts to return to some semblance of normality, the economic and business impacts are being felt with ever greater severity. Many businesses are reducing off their workforces numbering in the hundreds and sometimes the thousands.
In a bid to survive the aftermath of the coronavirus economic impact, many businesses are seeking to cut costs, reduce overheads, and are adjusting their business models in order to survive.
Some businesses have been impacted more significantly than others e.g. travel industry. We have seen the Airline and Tourist industries take a massive hit:
- Virgin Australia – Went into Liquidation
- Virgin Atlantic – Seeking a reduction in costs of approximately 30%
- British Airways – Seeking to downsize its cabin crew workforce by approximately 20,000 people and reducing the salary cost overhead for the remainder by up to 50%
- Flybe – Went into administration
- Trans States Airlines (USA) - went into administration
- Compass Airlines (USA) - went into administration
As well as retailers on the British high street:
- Oasis and the Warehouse Group - went into administration
- Debenhams - went into administration
- Cath Kidston - went into administration
- Autonomy Clothing - went into administration
- Lombok - went into administration
- BrightHouse - went into administration
Businesses Need to Undertake Cost Containment and Cost Saving Activities Due to the Economic Impact Arising from the Coronavirus
Under the best economic conditions companies and businesses alike usually seek to identify and implement cost savings.
With the Coronavirus outbreak, the consequential impact on businesses and the economy as a whole, many companies, and businesses realise that they need to take decisive but high impact action.
Many are fully expecting to downsize, seek cost savings and manage cost containment in order to be able to survive the economic fallout from the coronavirus over the coming months and indeed years and survive long enough to benefit from an economic recovery.
Historical Cost Containment Cost-Saving Approaches
From a historical viewpoint, cost-saving/cost containment activities for business in the past have often been focussed on tactical and low hanging fruit activities as opposed to a short, medium and long term strategy to achieve cost and operational efficiencies in a more controlled approach as part of an overall multi-year strategy.
The tactical approach of letting us identify the 'low hanging fruit' which usually equates to 'we need to cut headcount', 'we need to reduce our IT costs', 'we need to stop printing and reduce our physical printer footprint', will be of limited benefit or value in trying to survive economically from the fallout from the Coronavirus situation.
The Future
Achieving sustainable cost savings and operational efficiencies under such difficult circumstances must be dealt with on a carefully assessed, well informed, planned, and controlled delivery basis.
Multi-Year Cost Savings and Cost Containment Approaches
In practice, the best way to identify, decide, deliver and implement cost containment and savings ‘effectively’ is to take a strategic approach and holistic business perspective looking at the savings and containment approaches in the short-medium and longterm using dedicated specialists to undertake the work of:
- Analysis to uncover candidate areas for cost-saving and to uncover inefficiencies
- Impact Analysis to ensure that cuts or changes are viable and sustainable for the business
- Risk Analysis so that the decision made are based on calculated risk
- Preparation within and across the organisation to ensure that changes made are effective
- Delivery of the cost savings over a defined time frame
- Assurance that savings and containment activities ensure that the business survives
You should note that approaching cost savings and/or improvements in operational efficiencies in this way can include the quick win activities as the first stage of a more coordinated approach to saving costs, carried out in a controlled manner as part of a larger plan, ensuring that business survives in the short term and survives long enough to enjoy an economic recovery in the future.
How We Can Help You
At Bentley Moore Executive, we have specialists with excellent commercial experience in cost savings, cost containment initiatives, as well as operational efficiencies gained operating in the public, private and charity sectors.
If you want to know more or wish to engage us to have a consultation on sustainable cost savings for your business or organisation, please do feel to contact us.
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