I cut the creeping costs. Now they are back. Help!

Dear Aunty B,

Last year I decided I had had enough of creeping costs. I put posters around the office of people in army fatigues holding guns and across it in red I wrote “Declare war on costs”. I then asked everyone to come to work in army fatigues and present one suggestion on how we could save costs and we got 5% cost reduction going forward.

But the creeping costs are back! Costs for stationery, new chairs, new computer, in-house lunches, outside lunches, taxis, it’s all back where it was!

How do I declare war again? Last time was so effective but I don’t think I can better it.

Over shelling out,
Geelong

Dear Over shelling out,

I like the war theme but apart from a social outing to the rifle range I think it might be time to deviate and try something new.

Successful US entrepreneur Norm Brodsky tells a great story about how he cut down on creeping costs from his early years running Perfect Courier. He says as growth accelerated he saw more signs of waste. One day he was tipped over the edge by his pen bill. “We had 40 employees and we were buying 40 pens a week.” Now that sounds to me like a little mafia cell was running a pen racket from the back toilet, but Norm is a nice bloke so he never assumed he had Tony Soprano on staff.

So he raised the pen issue with a key staff member who looked at him: “Is it really such a big deal?”

Huh. Imagine saying those words to a crazy entrepreneur obsessed with the bottom line.

And of course Norm did give him the expected response: “Forty pens at $1 a pen is $40 a week, which is $2,000 a year for pens! What else are we wasting money on?”

So then he did what gives us entrepreneurs a bad name. He came up with a ridiculous solution which didn’t work. He decreed that no one got a new pen without handing in an old one. Of course people then spent their productive time at work inventing ridiculous reasons why they could not hand in an old pen and why they needed a new one. Two months later? Still buying 40 pens.

So then Norm tried this. No more pens. Ever. What we will do, he decreed, is take all the money we used to spend buying pens and put it into a special fund for employees and at the end of the year we will figure out what to do with it.

Well, he claims that his staff after initially going nuts, soon acclimatised and his firm never bought another pen for 20 years. Twenty years! Like a true entrepreneur who lives and dies by the maxim: “beg borrow or steal” he never asked where his staff got pens for the next two decades, although one would suspect the little mafia cell in the back toilet turned their attention to stealing pens rather than selling them.

Anyway the point of the story is that pens became the new guns if you get my drift. Every time pens were mentioned, which would be often given they had none, a powerful message was sent. So follow Norm. Pick a powerful signal and go nuts. Ban something irrational and very necessary. People will get the message! But Norm makes another good point. You can’t act crazy if your staff don’t know you love them. His point is if the staff knows the company cares about them then they will have the desire to help the company once they know how you really feel about creeping expenses.

So go forth and go nuts!

Good luck,
Your Aunty B

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