Expense is the piece that is most often attacked in a Cost
Reduction Project (one-time) or Process (ongoing). Everyone is
often told to cut back until it hurts and then cut some more.
Cost reduction hits the national business news on an almost weekly
basis as big name industries announce across-the-board cuts of 5,
10, or even 20%. People usually get the short end of the
expense reduction stick and the implications are wide ranging and
severe. Studies consistently show that across-the-board
personnel cuts do not lead to long-term corporate
success.
The Profit improvement Process (PIP) is effective because it
focuses on loss and revenue in addition to expense.
Everyone in the company is engaged in a positive approach toward
building a stronger and more profitable company. People win
with a PIP.
Examples of candidates for cutting in Cost Reduction include:
 | Every dollar of expense that is removed reports directly to
the bottom line. |
| Training creates an awareness of what being a Cost-Effective
Organization is and expenses drop even before specific projects
are identified. |
| Priorities are set and excess expenses are adjusted in order
of that priority. |
| Checks are made to ensure that nothing is cut too
deep...resulting in higher costs. |
| This is a positive approach to expense management. |
| In some cases expenditures are increased because the
case is made that there will be a return on that investment. |
| Revenue growth is kept in the picture to keep the company
vital and alive. |
