For a while now, you have managed a large department as a good manager. You have also cut costs, whenever possible. But now the management wants you to cut down on administrative costs by up to 20 %. Are you clueless about how it can be done? Read on.
Administrative cost-reduction opportunities follow similar patterns virtually everywhere. As you begin your pursuit for administrative cost savings, keep two key points in mind:
First, forget about finding a single idea that would radically change the cost structure of your organisation or department, thereby solving your problem in one go. You need to structure different solutions for different problems.
Second, you should tailor the reductions you pursue to your savings goal. Incremental ideas with minimal impact on other departments can allow you to trim up to 10% of costs. Redesign or reorganisation ideas often eliminate the lowest-value activities, with moderate impact on other departments, and can help cut expenses by up to 20.
1. Reduce spending on department management
Most administrative departments (particularly those with more than 20 employees) use as much as 20% of their budgets to supervise and coordinate their own activities. Instead determine which parts of your department are performing essentially the same tasks they were a year ago. Those parts probably don’t need the level of supervision they once did.
2. Restructure or cut cross-department activities
If you are hunting for savings of 30% or more, then is it is time you focus restructuring the inter-department activities. For example; for interviewing a candidate, only the most skilled interviewers should participate. This will lead to both decreasing the hours spent on the activity and increasing employee productivity.
3. Eliminate unwanted programs
Finally, if you can’t reach your savings target through the actions described above, you will have to take the painful step of recommending that entire tasks or programs conducted by your department be cut. Determine which programs involve
an unusual amount of work to support a portion of the company (for instance, a certain product line, region, or customer segment) that is unprofitable or less profitable than the company average.
4. Gain control of Telecom spending
Many companies usually do not manage their telecom and software spending wisely. They are in most cases spending almost 35% more on these services. With better management, companies will be able save up to 35% on telecom and other software services which will prove highly profitable for the businesses. Intermediary companies provide better rates than going directly with the service provider.
To cite an example here; an insurance company saved 40.21% on their business mobile bills when they moved to Savincom versus when they worked directly with the service provider. They claimed to have experienced better and personalised service with all that saving.
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