example of Impact - OPERATIONAL EFFICIENCY / EFFECTIVENESS

Developing a comprehensive cost program

details

Client background and situation:

Financial services company

Financial services company

Facing declining revenues and needed to bring costs down to more than offset this amount and boost profitability

Facing declining revenues and needed to bring costs down to more than offset this amount and boost profitability

Needed to drastically reduce costs in its functions but carefully as it's a high value area for the organization and helps fuel digitization, automation and analytics

Needed to drastically reduce costs in its functions but carefully as it's a high value area for the organization and helps fuel digitization, automation and analytics

THe past

Prior approach & challenges:

Many prior rounds of cost cutting but difficulty in sustaining those cuts long term - they would creep back in subsequent years

v

Internal fatigue from constant cost cutting focus and poor communication about where some savings could be invested in areas of growth

Many prior rounds of cost cutting but difficulty in sustaining those cuts long term - they would creep back in subsequent years

v

Internal fatigue from constant cost cutting focus and poor communication about where some savings could be invested in areas of growth

solutions

Coppertree Partners approach:

established governance and program

Put in place firm-wide reduction program with broad executive level communication of importance and appointment of key leaders

developed strategic plan, principles and targets

Crafted strategic pillars that emphasized value to the end customer, accountability for results into performance management systems and involvement by everyone in the organization

analyzed cost baseline

Categorized company spend into high and low value as well as costs that would be a stretch to remove; compared to benchmarks of similar organizations

pushed for more technology adoption

Challenged leaders of each unit to consider how technology could help not only lower costs but also lead to higher customer satisfaction

took a holistic approach

Evaluated all possible levers including process improvement, elimination of low value or duplicative work, nearshoring/offshoring, outsourcing, movement of activities to a shared service, etc. Worked on the demand side to put pressure on business units to also eliminate and restructure using a “zero based budgeting” approach

established change management program

Identified change champions and internal training to empower staff to identify efficiency opportunities

Impact:

  • Over $125M in costs reduced with strong framework and approach for future initiatives

Additional insights and takeaways

Bring a strategic mindset to the back office. A cost program is a strategic opportunity to pursue growth, innovation and enhance the customer experience. Use it to determine the most valuable work to be funded and be outcome based; determine where the future revenue pools are and the company’s current position and trajectory.

Cost cutting itself is not a strategy. It’s a short term fix and the severity of actions depends on your current situation. In a crisis you can freeze hiring and T&E spend, delay capex investment, renegotiate with suppliers and even do sale leasebacks to free up cash. Find opportunities to improve the quality of work and create more efficiencies as many costs come from the complexity of an organization (# of divisions, locations, products, etc). Set aggressive targets understanding that not everything in the organization needs to be best in class while being careful on decisions that can’t be reversed like exiting a line of business where it would be difficult to rebuild a client base later. Zero-based budgeting principles force the conversation to the most efficient return on spending. Don’t be too democratic – applying cost cuts uniformly might damage long-term value for short-term earnings. Finally track costs carefully and ensure top management is extremely vocal, supportive and internally aligned. Align manager compensation to costs they control.

Get In Touch

RECEIVE ALERTS

NEW YORK, NY

917-727-6345

neil@coppertreepartners.com