8 tips to cut costs in times of crisis

One of the most important keys we have in companies is not to let a crisis get stuck. This makes it over time much more difficult, more complicated to resolve and more radical measures.

Like any action of this type, it means that we are going to have to make changes. The changes are going to have to be communicated especially to our workforce. They will also have to be communicated externally, depending on the situation.

And before all of that, we are going to have to talk to our key team for this transformation and change what we need to make to get our company back on the path to growth and profitability. These are our allies. The coalition that will help us achieve our objectives.

Within all the actions that we are going to carry out, it will be very convenient to establish some of them that are easy and quick to achieve so that the plans that we explain internally acquire credibility, and that it is observed that they are achievable. Always with the aim of maintaining the maximum degree of motivation in our employees, in spite of the fact that the actions may be hard.

Next, we will see in a brief way what kind of actions we can implement to solve a crisis situation in our company.

Analyze your expenses

Conduct a thorough review of your expenses and determine which are essential and which are not. Consider eliminating or reducing non-essential expenses.

Negotiate with your suppliers

Contact your suppliers and negotiate lower prices or longer payment terms. If you have several suppliers, compare prices and terms to get the best deal.

Optimize your inventory

Analyze your inventory and reduce products that are not selling well. Also consider reducing inventory levels to free up capital.

Review your contracts and subscriptions

Analyze your contracts and subscriptions and cancel those that are not essential or are not being used. Also consider renegotiating contract terms.

Use technology

Use technology tools and applications that allow you to automate processes and reduce personnel costs. Also consider implementing telecommuting solutions to reduce office costs.

Analyze the components of your products

If you are an industrial company, look for alternative raw materials and components that meet the specifications required by the customer but have lower costs.

Manage collections

Manage collections more efficiently by requiring customers to meet deadlines and, where possible, reduce collection periods.

Review prices

Review your product prices and margins to ensure that you have positive profit and contribution margins. If not, decisions will have to be made.

When you have implemented all these actions, you will have made sure you have a positive profit and contribution margin.

The future of work and workers II

The role of private organizations in the world is very important. Especially in the industrialized world. Governments do not seem very determined to address the future of work, pensions and other relevant issues directly. It is true that it is not easy, but someone will have to tackle it eventually.

Companies in recent decades have addressed processes of change and improvement, from the quality revolution through “Just in Time” to project management. Later we began with e-commerce, environmental issues, health and so on, advancing to our days in which we are immersed in a great technological change at an unstoppable speed where Big Data, Blockchain, Metaverse, IoT but also sustainability and governance and much more are being the main characters.

But without a doubt, in all the changes that have been taking place over the years there have really been some key players.

Who have these been?

This can only be answered in capital letters: PEOPLE.

We have had organizations focused solely and exclusively on profit, customer-centric, and now… are they or will they be employee-centric?

If we want workers to live with enthusiasm every day, we need a high degree of commitment on their part and to achieve this, companies must commit even more to them.

Starting with those ESG strategies need to be clear to your employees. This will undoubtedly have a clear and significant impact on success. New generations are much more interested in working for sustainable companies than baby boomers may be.

A very good connection between ESG and purpose will be fundamental and create the fundamental reasons why employees come to work daily, in person or virtually.

So, we now enter that most challenging part of making it live in organizations.

One of the keys, once the foundations such as those mentioned above have been established, is the well-being of employees at work. Well-being that can be improved with actions such as, not only with compliance with current regulations, but with digital disconnection outside working hours, professional help therapies, mindfulness, nutrition management, physical care, training, and continuous development.

A company with happy and engaged employees can substantially increase sales and productivity, which helps build a high-performance work environment that improves the quality of life for everyone in the organization.

The future of work and workers I

We live complex times. Of course, it is not the first time that it happens to us human beings throughout our existence, nor will it be the last. What is certain is that we have always overcome it and that is the only reason why we are still here today.

When I speak of the complexity of these moments, I am not referring to a situation of war, which also complicates the situation, but to the changes that we are experiencing so rapidly in economic, social, technological, health and even spiritual aspects.

As far as work is concerned, one of the aspects that always worries us is the future and above all “our future”.

Especially in our European environment, the debt of the countries has grown substantially in recent years. Our life expectancy is lengthening every year. Some say that every ten years life expectancy increases by one year. You only have to count how many decades you have lived, then you observe at the time you were born what was the life expectancy at that time. There is a significant drop in birth rates in most Western countries and that makes us see that the costs of our health systems will also increase substantially over the next decade.

There is a good reason for this, the high birth rate that the “boomers” had are those who now begin to have ages in which the requirements of health are increasing.

In short, we have a good combination of factors to ask ourselves how our pension systems are going to be able to bear so many costs and for how long (an average of twenty years or more paying for pensions and attending health costs) with a population in age of contributing less and less.

Although talking about a solution to this problem is to delay retirement, this idea is not socially accepted at all. No one wants the government to come saying to us we have to keep working when we should be retiring. So, this solution may have few signs of being feasible.

Therefore, it seems that the only solution, which is not so immediate but can be accelerated, would be to make work the passion of our workers. Something that keeps them excited every day, they feel like to start the day to face the challenges to be solved. It would be the only way that some more could be able to continue working beyond the current retirement age.

And who can do something about this?

It is the organizations, their governing and management bodies that can make this happen.

Three ways to recover motivation

Every leader usually deals with employees or teams in a daily basis. Although people use to be motivated, sometimes we find as leaders employees that lose their motivation.

We know what does mean. For sure sometimes we suffered of this bad situation. When people lose motivation, it is hard for them, and they are disengaged from work and their productivity goes down very strongly as result of these feelings.

However, as leaders we must be empathetic with our people. Human beings need to be motivated to face the challenges they face on their jobs and at the same time to find meaning in the things they do. Some of us have developed more certain parts of our brain and we have a growth mindset that permits us to pursue to learn new skills and meaningful targets. However, all those with a fixed mindset also have the opportunity to develop and learn those skills (see Muvens.com).

Pursuing a learning path, we will obtain a good portion of dopamine. What is really dopamine? It is a biogenic amine neurotransmitter that is used in multiple circuitries in the brain. One of the circuitries used is the mesolimbic system and is involved in behavioral motivation for reward and reinforcement.

At the end with this flux of dopamine we will engage more and better in those activities.

As I mentioned before, we have different mindsets and although growth mindset people are more used to follow a learning path to discover new skills exploring, discovering, learning and experimenting, there are others with a fixed mindset less given to those activities. Organizations must develop the conditions to encourage employees to do so.

This encouragement is possible to do it motivating employees without big changes in the organizations by learning their strengths, experimenting, and helping them to find a clear purpose of the work.

One of the ways we can activate employees is to value them for their virtues or character strengths. This will make them to show their values of self-expression. Self-expression will vary depending on your location and the culture you are steeped in and it can be defined as Judith Glaser said, as the most important way for people to connect, navigate and grow with each other.

Other way to activate employees is when we offer the possibility to our employees to experiment in a “safe zone”, where experimenting is an activity that give them the freedom to make mistakes without any fear and without consequences for them.

Experimentation will pushed also creativity and lacking challenge or struggle will permit a better life for our employees opening their minds to innovation and creativity.

A third way is instilling a sense of purpose in our employees.  The purpose must be customer oriented, and it must stimulate the commitment of people. Purpose becomes relevant when it is not only authentic, but also connected with a corporate strategy that generates a sustainable competitive advantage. Purpose – not only ESG factors – becomes a driver of positive change while ensuring that companies continue to create economic value.

At the end all above it’s a habit, a way of being, a style of existing.