Mazzella Wire Rope and Sling Co. called it the Laundry List program. Employees compiled a "laundry list" of dozens of cost items, from waste disposal to utilities. Then managers assigned teams of volunteers to look into each item. The teams studied historical costs. They analyzed the benefits of the expenditure and the quality required, then brainstormed ways of saving money or getting the job done better. When a team of researchers ("launderers") completed its investigations, members put on a presentation at the Cleveland company's weekly staff meetings -- and managers were charged with implementing the best ideas. The savings: "More than $70,000 in the first year alone," says Vice President Jim Mazzella.
How many companies for how many years have told employees they have to cut costs? Managers lecture and cajole. They nag people to turn off the lights and not to make unnecessary copies. And what happens? People do what they're supposed to do for a while (or as long as the boss is looking), and then they go back to working the way they always worked in the past.
But it doesn't have to work that way. Heck, cost cutting can be fun. Here are some first steps:
- Get employees involved. When teams of people are assigned line items, as they were at Mazzella, they take ownership of those items. They understand the expenditures the way they never did before. They come up with better ideas. If behavior on the office or shop floor needs to change, they make sure it does.
- Show people why it matters. The phrase "We have to cut costs" rings hollow if employees think the company is just being cheap. But if people understand that reducing costs 5% can boost profits, can help their company beat the competition, and can help protect their own jobs, they understand why cost cutting matters. Human beings aren't lab rats. The why is just as important as the what or the how.
- Make it into a game. Nobody gets too excited about cost cutting in the abstract. They don't know how they're doing. There's never an end to it. But what if you set out over a six-month period to reduce costs on three specific items? First you'd get together to choose the items, the goal, and the time frame. Then you'd put up a scoreboard and track your progress. Of course, you'll also have to ask people what they want if they win. A small cash bonus? A company barbecue? A commitment from the boss to dance the hula in front of the whole organization? Anything goes.
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