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Is reducing cost does always mean cutting jobs?


Is there ways to innovate in organization that may reduce cost without cutting jobs? As IT specialist, I've seen too few people thinking that there are ...What do you think? What's your experience?


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Opened by Antoine Fournier, Head of ECM, Input and Output management, Zurich Insurance
Feb 20, 2013.



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Henri Clemençon Oil&Gas Geosciences Expert, Teaching, Business Development, HR
Feb 21, 2013

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No!
During the last 10 years, I have occupied three Management positions - a large team who did not have enough work - when I left, they were hiring and making money, rebuilt the strategy of a large branch of a Industrial Group (this Company should be the leader in its domain whilst it was considered condemened to decline when I arrived) and prepared the grounds for my employer to negotiate a sizable contract after 12 years of failure.
The secret: Use lateral thinking....
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Antoine Fournier 67 Antoine Fournier Head of ECM, Input and Output management, Zurich Insurance

Feb 21, 2013
Great experience & great success!
Thanks for sharing.

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Stéphane Gasser Président, Prométhée
Feb 21, 2013

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Another way to reduce cost without cutting jobs is to reconsider the technical processes which are used in the company. Alternative technologies may exist, which might be cheaper on the long run (even if investment is required to transpose that technology).

By the way, looking for such alternative technologies is my job. This is why I know it works.

For instance, a customer of mine, working in the concrete industry, asked me to find alternative technologies for a process of his, because what he had found (and used) on a pilot plant was way too expensive.

I found solutions from food industry which were ten times cheaper (no kidding!). It looks magic, but it isn't: the solution he knew was mostly used in industries like chemistry, with very high quality requirements, whereas my customer's requirements were much below.

SG
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Shane Granger Analyst
Feb 21, 2013

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Antoine,

Its interesting that someone from France (please don't say your from Belgium :)) asked the question and someone from Australia answered.

The reason I say this is one of the most expensive places to hire labour in Europe must be France even after several years of declining GDP (now negative in most recent Q) and the most expensive place to hire in Asia is Australia (due to high $AUD, high interest rates and excess FDI since GFC).

Governments want to fight labour market trends because it is politically sensitive and a vote winner while business wants to maintain a consistently higher growth strategem. Unfortunately both cannot be maintained. Just recently I've started to raise the subject of #peakjobs. If your interested see my most recent article at URL: http://wp.me/p2Omz6-5a

Antoine (and many others) might ask this very good question and Henri quite rightly discusses innovotion and lateral thinking. Unfortunately, in a high priced labour market it doesn't take much imagination to cut from the top of your P&L so if you want to change the result, you need to start thinking about the structure.
Shane
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Vincent Van Damme Jul 25, 2013

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Certainly not.

It all depends on the cost structure and on the added value of human capital in a specific organization.

I currently work for an enterprise where the cost structure is quite demonstrative : 50% of the production costs are beyond control. Labour cost represents a small 10%. The rest (40% !!) is directly linked with the industrial process (engineering, maintenance, fuel, ...)

The management has clearly decided to invest in human capital, with new salary ranges and incentives programs (which will increase the labour cost) to sustain quality programs.

These quality programs have an expected impact on costs (reducing mean time between failures, mean time to repair, fuel consumption, ...) and this impact can be much higher then a possible impact of cost-cutting in labour cost.

This is also, by the way, a magnificent example of the integration of business issues in the HR strategy.

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Jesse Domingo Leadership Adviser, Strategist
Oct 11, 2013

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No. Most of those who resort to streamlining do so because they lack resourcefulness, they can't think of other means, they failed to thoroughly analyze the whole scenario, and so they sort of indirectly put the "blame on staffing."

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Henri Clemençon Oil&Gas Geosciences Expert, Teaching, Business Development, HR
Feb 21, 2013


Lateral thinking: I shall illustrate my point by taking an example not related to my own experience, although I did something similar at a much more modest scale;
Think about the founder of Ikea making a presentation about his project for Ikea at the board of a traditionnal furniture maker. Do you think that he is likely to be given time for the entire show and be allowed to work on his project?
Think differently: from my own experience (38 years in the industry), very few people have this type of talent and not all managers are ready and open to listen.
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Marie-Hélène Gramatikoff Sep 3, 2013


If you start thinking in terms of cutting structure cost, it means that your start having a follower attitude towards your market.

The thing to do is, I agree with Henri "think different" , study a new positioning in your market so that you can start to drive it again.

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