Recently, I wrote about the cost of pay freezes and the harm they cause to companies struggling to survive. I received lots of feedback on the article, with most thanking me for saying what they’d been thinking for some time. A few folks expressed skepticism about my claim that employees would be able to find operational savings “within hours” that would more than cover the cost of a small merit increase. They asked, “How would you do that?” Here’s how.
Step One: Announce your plan to conduct a company-wide “Cost Saving Day.” (I recommend announcing this at the same time you announce a merit increase for all employees!) Ask every employee to begin thinking about ways they see your company wasting money. Have them create lists of those money wasters before the planned “Cost Saving Day.” Be clear that you need their help to find the savings that will pay for their merit increases.
Step Two: Choose a business day and “close the business” for the day. Gather all employees for a kick-off breakfast to explain the day’s activities and establish goals for the day, including a cost-reduction target.
Step Three: Separate everyone into groups according to their functions (construction, service, sales, etc.) and have them work together in their functional groups to identify cost-saving opportunities within their area. Give them 90 minutes to come up with as many ideas as possible, then have them select the three ideas with the greatest potential for success. Have them estimate the potential savings. Don’t throw the other ideas out—just focus on the top three.
Step Four: Bring everyone together and reassign them to cross-functional teams, repeating Step Three, focusing on cross-functional breakdowns that create waste, inefficiencies, or errors. Assign to each team a specific area of operations so that teams focus on different areas.
Step Five: After a team lunch, have spokespeople for each of the teams present their top three ideas for cost savings—estimating potential dollar amounts—and keep a running total of those savings as the presentations progress. Once all teams have presented their ideas, report on the total estimated savings. Then, assign company leaders to address the opportunities within a specified time frame, involving team members.
Step Six: Open the floor to discussion about the day’s events and gain everyone’s commitment to implement the changes necessary to achieve the savings. Have everyone sign a pledge poster.
Step Seven: Celebrate the day’s achievement! Reward everyone in some small way to end the day. Then, get to work by prioritizing and acting on the cost-saving opportunities.
This day will require good planning and facilitation of discussions. It might be useful to have an outside facilitator for the event. However you go about it, I can say with certainty that it will be worth the effort, in many ways. I ran one of these events for a former employer and the results were outstanding. Teams identified hundreds of thousands of dollars in cost savings and most were fairly easy to implement.
The benefits of “Cost Saving Day” go beyond the obvious collection of ideas. It will demonstrate your respect for your team’s expertise and galvanize their commitment to a shared responsibility to improve. Linking improvement to their merit increases gives them “skin in the game.”
In the end, you won’t be able to implement every idea that came up that day, but you will find important cost-saving opportunities that will justify the merit increases, and you will definitely inspire your team to help your company thrive in the challenging years ahead.
Don’t neglect the hard work of following through and implementing the changes. Ideas are relatively easy to come by—executing them is the hard part.