How can CFOs reduce costs without harming growth?

Each year, Gartner surveys hundreds of finance leaders to understand their critical focus areas for the year ahead. Cost management, talent and technology topped CFOs’ list of priorities for 2025.

In the Q1 edition of The CFO Report, we provide three related strategies that can help you address the top finance challenges of the year. In this addition of the CFO Report Newsletter, we will address how you can foster a culture of cost optimization.?

As CFOs face pressure from investors, the board and their CEO amidst an uncertain economic environment, they must find ways to rally and sustain enterprise leaders’ cost management mindset. Your CFO peers are asking Gartner:?

How can I reduce costs without harming growth?

Many cost optimization initiatives fail to create lasting cost structure discipline. Why? These initiatives often follow a predictable cycle: unsustainable moves to meet short-term pressures, which leads to stressed employees and managers, which in turn causes costs to creep back in. The result is limited progress on cost objectives and the perception of finance as the “scorekeeper,” strictly policing adherence to a savings target above all else.

Embed cost optimization as a consistent mindset among business leaders

CFOs can create a cost-conscious culture with clarity on manageable targets. This type of culture constantly sends signals about what the organization values by leveraging the way it operates to reinforce accountability for cost outcomes.

For instance, CFOs can work with HR to build cost consciousness into incentives by tying individual bonuses to the achievement of cost targets. Or they can arrange for the finance function to provide training to nonfinance employees about total economic cost and shareholder value drivers.

As well as sending subtle signals, CFOs also need to be explicit about what they need from the business by clarifying which behaviors are acceptable or unacceptable when it comes to cutting costs. Use the figure below as a baseline to build your own list of pathways to cost savings, and then socialize the list with stakeholders.

This is just one example of how Gartner is addressing the top challenges faced by CFOs this quarter. For more insights into the key challenges for Q1 2025, download the CFO report.

Take action with Gartner support:

• Learn more about boosting profitable growth through optimized capital allocation and cost management with 3 Essential Profitability Strategies.
• Schedule a call with a Gartner expert to uncover why cost- cutting programs typically underdeliver, or to get support in building out your cost optimization roadmap.
• Compare spending and staffing plans to peer organizations using the Gartner Finance Budget & Efficiency Benchmark.