According to the latest survey of the nation’s top Chief Financial Officers, the number one concern among financial executives is the latitude they have to cut costs in a company. As revealed by a recent Deloitte survey, the “secret weapon” companies are now employing to grow their companies is the ability to cut costs. While client sales and market expansion were all critical elements, top CFOs and senior executives overwhelmingly cited cost and budget efficiency as the primary way to fuel growth.
Unfortunately, in today’s unpredictable economy, especially with increased partisan politics, the barriers to cost reduction are more challenging than ever. According to the same survey, 48 percent of CFOs admitted that their cost initiatives within the last year failed to meet their objectives. The economy’s toll on company savings accounts has also taxed the ability to reduce costs.
In a major announcement, Chief Financial Officer Marianne Lake said that JPMorgan Chase & Co. would be accelerating their cost cutting initiatives. While they’re on track to reach prior goals, the company has reassessed and developed new cost-cutting targets based on the market condition. By the end of next year, the company aims to eliminate 17,000 jobs – or 6.6 percent of its current workforce.
Top Ways CFOs are Reducing Costs Strategically
Instead of a “slash and burn” approach, most CFOs are strategically approaching cost reduction to avoid damaging long-term impacts or shaking a company’s foundation. Some ways CFOs are reducing costs are:
- Improving operational efficiency. Rather can cutting costs via budget, many CFOs are looking for ways to increase operational efficiency, which not only lowers cost, but can boost profit as well. Ensuring talent is filling the proper positions and that complex processes are streamlined, CFOs can improve efficiency immediately.
- Reducing overhead. From the cost of the property to the price IT, overhead is one of the largest considerations for any CFO. Cutting dollars by watching business travel expenses, reducing shipping costs, or even renegotiating phone and internet services can make a major difference.
- Talk to your employees. As the front line of any company, your employees will have many ideas on how to reduce costs while boosting efficiency. Give them the opportunity to have a voice and positively impact your operations.