In a Downturn, Include Your Employees in Cost-Cutting Decisions

By Patrick Daoust and Paul Simon
This article first appeared in Harvard Business Review on May 6, 2020.

Almost every business is reorganizing its operations in response to the economic slowdown caused by the Covid-19 pandemic. Often, companies take a top-down approach to resizing based on a limited set of data such as earnings forecasts and competitive benchmarking. But following this playbook usually results in “wrong sizing” and demoralized employees.

Instead, leaders should redesign their operations based on data provided by their most valuable sources of proprietary insights — their employees. Democratizing the collection of data and recommendations allows leadership teams to gain a much clearer picture of activities and initiatives underway within their organization. It also offers a more detailed lens through which they can evaluate which activities are the most valuable to achieving strategic objectives and which ones can be automated or managed in a shared services environment — or ceased.

When leaders take this bottom-up approach, we have found they not only cut costs significantly but also realize their goals more rapidly because managers and employees are motivated to help. Changes are then also more likely to stick.

(Source: www.oliverwyman.com)