22nd Jun 2020
3 Min Read

How to reduce non-essential spending

Russ Norton
Russ Norton
Strategy

The coronavirus lockdown has impacted every business to some extent, and a predicted recession places increased pressure on organisations of every size, shape and sector.

While furlough and government loans provide temporary relief, in the longer-term, businesses will have to make difficult decisions about how to maximise productivity and minimise costs.

Effective employee engagement is essential to how you deliver this.

From empowering people to make the right decisions and celebrating their achievements, to being honest with employees when times are tough and showing empathy when difficult choices are made, communication is key to how your organisation moves forward post-COVID.

If saving money is high on your agenda, this four-step ‘AREA’ model can help you craft a sustained communication campaign that drives and delivers real results.

  1. Awareness. Raise the issue to the very front of colleagues' consciousness; make clear what the goal is
  2. Responsibility. Help employees understand that change/improvement starts with them; their contribution is crucial
  3. Energy. Provide guidelines, campaigns, toolkits, storytelling and more – delivered by a taskforce of champions, to ensure the message stays top of mind
  4. Action. Measure impact and progress as it happens, celebrate successes, wins and learning, adjust course, if necessary; be flexible

AREA was originally devised by Charlie Sampson of Sampson Coaching. We’ve applied it to internal communication best practice with the intended outcome of reducing non-essential spending in your organisation.

Step 1: Awareness

Awareness is not an outcome, but it is the essential first step to help galvanising people behind a common goal.

  • Encourage your leaders to talk openly and honestly about the need to save costs
  • Report on the numbers now – sharing as much as you can
  • Set a stretching but achievable target
  • Reinforce the ‘why’ behind the need for the saving
  • Focus attention on one key issue at a time to boost awareness

PRO TIP: People change behaviour when three conditions are met.

With cost saving, the motivating factors are numerous, but focus attention on the ones that are most relevant to your audience: ensuring the long-term viability of the business and therefore protecting the jobs of employees.

Step 2: Responsibility

It can be easy for people think their contribution is too small to make a difference to a large target, so handing over responsibility for change to employees is both empowering and critical.

  • Break down your targets by division or team to make them feel more achievable
  • Give people permission to problem-solve themselves. Faced with the challenge, what’s their solution?
  • Remind people of the simplest ways they can contribute
  • Lead by example – encourage leaders to role model the right behaviours early
  • Build in mechanisms for accountability before a decision is made, and not after – this promotes flexibility of thought which can lead to more creative solutions

PRO TIP: Sometimes small actions can have a big impact, and the wrong decision could have unintended consequences.

For example, choosing a cheaper supplier might lead to a lower quality product and damage your reputation in the longer-run. When it comes to saving costs, it’s important to set clear parameters around what questions to ask when making a decision: what’s fixed and what’s more flexible?

Step 3: Energy

Right now, with employees working remotely and virtually, it’s particularly difficult to get and maintain attention. It takes a sustained effort to cut through the noise.

  • Establish a taskforce of champions to work with teams ‘on the ground’
  • Produce simple and impactful guides and toolkits that clarify the actions employees should take – print works especially well right now
  • Use storytelling to demonstrate the kind of behaviours and decisions you want people to take
  • Split your content into bitesize pieces and publish across all your channels often
  • Novelty is your best friend for capturing attention

PRO TIP: Your people know the skeletons in your organisation’s closet better than anyone.

Provide opportunities for them to give feedback about where costs are leaking or efficiency is lowest, and work with your senior leaders to solve these. This kind of reciprocity will earn extra loyalty and motivation from your people.

Step 4: Action

Cost saving doesn’t have to be all doom and gloom. It’s vital to report on progress regularly and celebrate the successes achieved by your people.

  • Focus on the proof points, not just the ambition
  • Measure, measure, measure - provide weekly updates on key figures and report on overall savings made
  • Share success stories and give recognition to those who’ve made the biggest contributions
  • Find simple (and inexpensive) ways to say thank you – postcards, discount codes, shout-outs on Yammer

PRO TIP: Everyone loves a bit of healthy competition.

While league tables can feel like naming and shaming, choosing to highlight the top 3 teams or top 10 individuals can evoke the same competitive spirit without publicly embarrassing those at the bottom of the chart.

Don’t forget that recognition is contagious. Implement the simple ways to “say thanks” and see how cooperation, collaboration, and good will spreads throughout your organisation.

Theory into action

The economic outlook is uncertain and potentially bleak. A recession means spending money will be tight and that will have an undoubted knock-on effect on budgets. Getting on the front-foot and empowering employees to be part of the solution can help soften this blow.

That’s why now is the perfect time to turn up the volume with a cost saving campaign. We can support you to deliver an impactful campaign of activity that delivers results. To find out more, get in touch with russell.norton@scarlettabbott.co.uk

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