Are we in control of rising cost or is cost ruling us?


Future cost trends

As a young financial controller I made an observation that I won’t ever forget. I had collected the various departments’ budgets for the next 5 years (bottom up process) and summarized the numbers. The 5 year period showed increased cost. When my manager saw the rising curves he stopped for some seconds and took the pen and drew a new line. “This is our future cost development” he said. At first I thought he was not serious, but after a while I understood he really meant it.

He told me that I should minimize the impact on the overall operations given the new target cost level. This was a healthy exercise that all businesses should undertake – even if they are not in crisis. My manager did not have to cut cost like this – he just did it – and I admire him much for this.

I worked in the Shared Services Division, and the cost cutting exercise did not impact our services much. Like you reshuffle your furniture at home every now and then – you should also do reshuffling and cut or do less of some activities, for a good cost impact.

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