Friday, August 1, 2008

Haymarket Cuts Costs With Suggestion Box.

Press Gazette is reporting an internal email sent by Lord Heseltine to his UK staff asking for cost saving suggestions. There is a reward pot of £10,000 (don't overdo it Michael!) to be shared amongst the best ideas. Mmm. I am not normally one to offer free consultancy but I will offer a couple of health warnings.

1) How will you discriminate between ideas that drop out of ones own job and those that are truly innovative?
2) What will you do if ten people have the same idea?
3) If lots of people send in ideas, but only a few of them get a money reward, will you not take up the other ideas? Or will you pursue all the cost saving ideas and only reward some of the people? Or pursue all the ideas and reward everyone with a very small sum? Any which way isn't there a risk of demotivating more people than you please?
4) The best cost saving initiatives involve all the staff all the time not a few people for a moment. Might not a better scheme be, to declare your cost budget and pay out to all staff, equally a percentage of the savings made in a co-ordinated margin improvement programme. That way you will be surprised at the peer pressure not to waste anything from stationary to travel, to paper, to pointless devlopment projects.

A 1% improvement in costs increases Haymarkets profits by 7% or more than £2m in a full year. Paying out 1/2% of the saving at best looks less than generous.

In short, the kind of scheme proposed is normally treated with cynicism by staff and at the end proves to be divisive and morale sapping and not very effective at cutting costs. That someone sent the internal note to PG suggests to me that Haymarket staff might already have worked that out.

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