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'Cost crafting' - the answer to budget squeeze?

'Cost crafting' - the answer to budget squeeze?

Nicola Hopes

13 November 2024

Let’s talk costs [cue eye roll]. Not your favourite topic, I’m sure, but we can do this.

Many of the organisations I partner with are grappling with 2025 costs right now.

Following last month’s budget, many in the UK are worried about the increase in operating costs for just staying in business.

Now I’m not here to debate the whys and wherefores of the budget (I’m sure you’ve got views…) but I do have thoughts on what you do about it!

Because I’m already witnessing the classic cost challenge behaviours and it makes me want to cry.

Blanket edicts like…

  • Every department take a 10% haircut on headcount costs
  • All recruitment is frozen
  • All development spend has a red pen through it
  • Change budgets are sliced in half

Sound familiar?

But it’s a sledgehammer when you really need a scalpel.

I don’t underestimate the challenge you face. I just see a different solution.

Blanket edicts don’t work long-term because they harm the core essence of your brilliance. The sledgehammer smashes at will, so everything suffers. Engagement wains. You get behind on your goals so confidence is eroded. You lose talent and customers aren’t happy.

Then when the sun shines (which it inevitably will) and it’s time to make hay, you can’t. Because you haven’t invested in the latest tractor, and half your farm hands are out harvesting for somebody else!

And when you’ve under invested, the budget you then need to keep pace is far greater. Because you’re playing catch up with the competition and customer expectations.

Instead, be more targeted in your budget management. Be more artful. And hold your nerve.

So, I don’t advocate blanket cost cutting. I advocate for cost crafting.

A delicate carving of the budget, done with real precision and intention. Keeping one eye on where you want to go in the future, whilst easing your current situation.

  • By all means cut headcount costs – but cut them in areas that don’t damage core goals and values, then leave the rest to keep you brilliant

  • Yes, re-assess your change portfolio – but sculpt a tightly refined and phased plan where you know every ounce of benefit you’ll get for that investment

  • Change your approach to recruitment – think about offering key roles as part time or fractional positions to open a new, affordable talent pool

  • Focus your development spend on key roles and talent – you might spend a few k growing your next superstar, rather than spending a fortune hiring them

  • Cut bureaucracy – trust your people to make good decisions and speed up progress, as well as freeing up senior leaders’ time

I know it takes more brain power, more debate and more time to be this precise with each line of the budget. But trust me you’ll thank me in the long run.

Remember the Seth Godin quote: “You can’t shrink your way to greatness!”. So let’s craft our way there instead.

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