You Can Cut Costs Without Cutting Jobs

By Jeri T Denniston, Chief Marketing Strategist, Denner Group International   4-12-2010

Takeaways: Involve your employees as business partners to identify creative ways to cut costs without cutting jobs.

let people use their brains.
you’ll be amazed at the ideas they’ll generate to cut waste.

This is a tip in the book Lead with LUV by Ken Blanchard (One Minute Manager series author) and Colleen Barrett, CEO Emeritus of Southwest Airlines. Southwest embodies the philosophy of “take care of your employees and they will take care of your customers. It’s spread throughout the culture of the organization and has helped them generate profits despite downturns in the economy. They proved that it is possible to cut costs without cutting jobs.

As every other organization has had to do, Southwest had to take a look at costs in order to eliminate waste. They did this without eliminating jobs by soliciting ideas from their nearly 35,000 employees, turning to their staff as business partners.

One flight attendant suggested they remove the Southwest logo from their trash bags, saving the company $100,000. A simple, yet substantial idea. During Desert Storm when fuel costs were so expensive, a group of employees created a program called Fuel from the Heart, where employees could sign up to designate a certain amount of money to be withdrawn from their paychecks to help cover the cost of fuel.

The book, Lead with LUV by Ken Blanchard (Blanchard Group) and Colleen Barrett (retired CEO of Southwest Airlines) is also about Servant Leadership and what it means – keeping your focus on your customers and your employees first as the path to creating a great company.

One of the quotes I especially like in the book is “Leadership is about going somewhere – if you and your people don’t know where you’re going, your leadership doesn’t matter.” Even if everyone does know and understand where the company is headed, making it happen is another thing altogether. That’s operational leadership, according to Barrett.

“This is the servant part of Servant Leadership,” she says. “It’s what leaders focus on after everyone is clear on where they are going. It includes policies, procedures, systems, and leader behaviors that cascade from senior management to front line employees and make it possible for the organization to live according to its vision and values and accomplish short term goals and initiatives.”

In a nutshell, she says “treat your people right, and good things will happen.” It certainly has worked for Southwest Airlines.  Founded by Herb Kelleher and later run by Colleen Barrett as President, Southwest has continued to succeed while other competitors have and are experiencing difficulties.

A Two-day exercise is all it takes

How does a company implement a cost cutting process similar to Southwest’s approach? One way is through a facilitated two-day exercise that focuses on cutting costs, not jobs. We take a cross section of your staff from all departments and levels and take them through a series of brainstorming exercises to identify ways they can individually and jointly cut waste. Then they crunch the numbers to determine what the cost savings might be, and present their ideas to the CEO and Executive Team for approval to move forward. The Executive Team makes an on-the spot decision- either a thumbs up or a thumbs down – or asks for more information.

Clients we’ve taken through this process have found an average of $1.5 million in ongoing annual cost savings, without eliminating jobs or investing in any new equipment or technology. The industry doesn’t matter. Giving your people permission to use their brains is the key.

Click here if you’d like to learn more about how to implement this at your company.  Or call Eric Denniston at 858-357-9600 extension 4 or email him at eric[at]dennergroup.com.