How to manage cost cutting at the organization

Even if you are a good manager, there will come a time when you must make hard decisions. You will be required to terminate the project, change the strategy and to fire employees. You cannot directly report to the company CEO, nor can you change strategy immediately without informing others. So before making any cost cutting plan, management needs to keep two things in mind. One is, you cannot stick to one method instead look for more options and be ready with alternatives. Second is, there should be a direct relationship between the amount you cut and the destruction that occurs. India should cut costs and put minimal impact on organization. You can cut costs up to a certain level in different sections like ideas cutting up to 10%, expenses cut up to 20%, and program elimination for 30% or more cut.


Reaching 10%

Activities like vacation, parties, event organization and re-mentoring are the cost that organization has already done it before. But if you combine activities like seminars and training into a single event, your company can save up to 40%. Companies can work on cost reduction by eliminating the areas that usually perform a single job like organizing events or parties. These jobs can be merged into the HR department, so that employees get to perform both valuable as well as irksome tasks and pleasure but less valuable tasks. After you have merged the jobs, you might feel bad about firing the employees. You know your employees who are not performing well and till now you are ignoring them. But think again even if you keep them now after one or two years they will be fired automatically. Do you want to waste their time as well as yours?

  • Reducing the department’s cost:

Most of the companies every month invest around 25 to 30% in coordinating the activities supervising and mentoring others. Companies need to mitigate the cost that is incurred because of time waste. By managing time, companies can reduce costs by 9 to 10%.

  • Reduce miscellaneous cost:

Cost of stationery, internet, power, and other unnecessary supplies that occur without approval of management.

  • Wait before increasing pay:

HR needs to scrutinize its employees before increasing any pay. You must see where your employees stand according to market demand.

Reaching 20%

  • Redesigning methodologies:

It is hard to reach a cost reduction of 20%. For this company needs to remove work that is redundant and irrelevant. HR can cut caused by using this method. This will reduce the department’s overwork and redistribute their energy in other important jobs. Research says that people have misconceptions that maintaining coordination is waste of money, but coordination is important in increasing efficiency, and they can communicate effectively.

  • Removing complex detail:

Complex detail causes excessive loss of time but if you prepare small reports, it will consume your less time as well as give you real time results. Imagine you prepare a long report, and your executive rejects it because it is no longer needed. It will not only waste your hours but also your motivation level and company resources. 

  • Alter the working:

It can be by altering the requirements of the company like some technology gets obsolete. Another is by using men’s power efficiently. Time to time companies should look for the process where unnecessarily time gets wasted. How to save money whether by working in a group, doing it individually, involving machines etc.

  • Remove established notions:

Rewarding and suspending goes hand in hand. But is it something that the manager works for? Will it be fine not to organize a party? And if yes but not costly. Managers must come up with new ways to transfer and store data. So that chances of errors get reduced. If your company has a ritual of maintaining a balance sheet, see if it is possible to do it on alternate days.

Reaching 30% or more

  • Look for cross department management:

Managers limit their scope of cost cutting by only looking into one department, but you will be surprised how well a company can cut costs if they work together.

  • A line mutual interest:

There are several departments in a company that perform similar activities like when a department needs some stationery, they order individually without inspecting other departments. But if we do, we can reduce costs by eliminating numerous order placements and the time of their arrival.

  • Assign work to the most effective department respective field:

Sharing the job with the department who have more resources than yours and when your resources get finished. There was an earlier perceived notion that if work is limited to one department means it is an in-house job and highly confidential. but in today’s scenario each department is advanced enough to handle different jobs. Also, studies have shown outsourcing can reduce costs and can give better results.

  • Remove identical survey:

If one department purchased a certain item, it is recorded and then it is analyzed by several departments of marketing and finance. But it can be possible that for a certain branch of a product one single department handles the whole process. 

  • Removing unnecessary meets:

In organizing a forum or meeting, enough time, resources, and manpower are needed. If it happens several times a month or year, the company needs a huge penny to meet the expenditure. A company can sum up the whole thing in alternate months or it can establish an audit team to make timely reviews instead of organizing it at larger scale. 

  • Reducing administration and programs:

If you keep intervening, your employee’s efficiency will decrease. Leave them for a few days and restart the process, you will see how ideas generation has improved because they will find new methodologies and possibilities. 

Even after all the steps you have taken, the cost is still not managed you can try for removing programs. But yes, final approval will be off for all departments and executives. The department can give your insight into which program is flexible and less profitable.


Hence, all these strategies can jointly help in implementing cost reducing strategies in an organization. It is of crucial importance to investigate this matter, as it directly deals with the revenue, earnings, and overall profitability of an organization. However, utmost care should be taken by the management of the organization to avoid very harsh, or drastic measures which might go against the welfare of the employees. As this may in turn be detrimental to the future growth prospects and expansion of the organization.