Businesses should reduce cost, not cut cost – Financial expert
Charles Mensah, managing partner of Trust Consult, asserts that organizations should participate in cost reduction rather than cost cutting.
According to him, cost reduction in the current economic slowdown entails discovering innovative business solutions.
“Therefore, you’re going to consider novel methods of delivering the service you’re offering and innovative approaches to accomplishing things. It is now time for us to begin considering the optimal course of action without compromising the quality of the objects.
“Because it is a phase that will pass, if you rush and cut costs, it will be tough for you to return once the phase has passed,” he stated on JoyNews’ PM Express Business Edition.
He said, “I believe that the majority of corporations have begun talking with their employees to put a hold on salary increases, as well as collecting the expenses and telling them that we don’t have cash, but we acknowledge the spending, so when cash flow improves, they’ll pay.
“I am aware of organizations that have enacted restrictive measures wherein they pay only 50 percent of the employee’s income today and save the remaining 50 percent for when the economy improves,”
Thus, he urged employers against rushing into decisions that could negatively impact their company when the economic downturn ends.
“Because as we speak, if you rush to cut costs and circumstances improve, it will be tough to turn on the machine. Because once the mechanism is in motion, key decisions are not rushed. It is a decent amount of time to discuss matters with your employees, next your suppliers, and finally your consumers. Thus, negotiations are occurring as we speak,” he remarked.