October 15, 2010

Sir Philip Green: Savings vs. Cuts

Mairi Henderson
Europe

Sir Green’s review of the government budgets and spending uncovered several startling truths that will hopefully make the government stand up, listen, take accountability and make things right without resulting in thousands of job cuts – so lets not get into the ‘it was the red party, it was the blue party’ debate, as I keep hearing in business these days ‘it is what it is’.

Philip Green highlights that the lack of control  of governmental spend and non-centralisation of certain purchases means spending has spiralled out of control. Simple things like having a standard limit for car hire or stationary orders and not staying overnight for a meeting that could be held by video/teleconference could generate billions of savings. More importantly it could save jobs and maintain the services provided to the people who pay for it, you and I, the public.

Correct me if I’m wrong though…as someone working in the private sector this sounds awfully familiar?! We have strict controls on travel budgets and have centralised ordering to ensure the best prices are sought. We help our clients to identify where savings can be made so they can invest their money on what matters, a more efficiently run and profitable company.

I am concerned that the ‘easy’ option will be taken – look at a list of employee numbers, salaries and job descriptions, set the criteria for cuts and within 3 months you have your savings but what is the true cost?

Some companies are scared of internal process improvement and see it as taking too long or too challenging to consolidate processes from several sites/departments. If it is done correctly it can be the easy option and with more favourable outcomes in the long run, sustaining a healthy business to the core. Sir Green said himself some of these changes could take one week to plan and one week to implement, so what’s the hold up?

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