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Reducing costs sustainably during COVID-19

Never let a good crisis go to waste.

With firms continuing to work from home, office rationalisation will soon follow.

Businesses and government departments have discovered that working from home arrangements have created efficiencies in many cases. Since March, employees have worked from home for health and safety reasons and to stem the spread of the virus. At some stage, the imperative to stay at home will end, either due to the development of a vaccine or because the virus’s life cycle ends. With either outcome, the need to work from home due to the coronavirus will disappear. However, another crisis looms, recession!

According to the Reserve Bank of Australia (RBA), the two trillion Australian dollars ($1.3 trillion) economy will have shrunk by 10 per cent in the first half of the year, marking the first Australian recession in 30 years. Furthermore, the RBA expects that the economy will shrink by 6% in the second half of the year, and unemployment will reach between 7.5 and 10%. The second wave in Victoria will only compound the situation, not only in Victoria but Australia wide. In all, there will be less money available in the economy, and financial stress will be placed onto businesses and governments. Simply put, costs must be reduced but at what cost to delivery?

Reducing costs is usually met with restructures and redundancies. Such measures might be seen as necessary; however, they are commonly implemented with scant regard for the effect on the delivery of products and services, or the sustainability of the reduced numbers.

The COVID-19 experience presents a unique opportunity to reduce costs in response to the recession sustainably. Firstly, many staff hate change and are slow to adapt. However, their ability to change has been dramatically increased because of office closures. The most obvious opportunity for cost reduction is by continuing working from home arrangements and reviewing office holdings, thereby reducing office costs. There is conflicting evidence about whether efficiency was affected or not during office closures. The answer to whether there was an effect on productivity can be traced to those businesses and government departments that set goals and objectives, have systems and processes to deliver these aims and continuously monitor and measure them.

During 2020, systems and processes that were never intended for prolonged use from home have been thoroughly stress-tested. If the home users were able to report challenges that prevented efficient delivery, and these organisations were able to adjust their systems and processes to ensure continued delivery, these organisations have a substantive opportunity. These organisations are positioned to adapt to parallel crises, both COVID-19 and the recession. They may never fully return to the office, as they are now established to work remotely, and are stronger as a result. It does not make them immune to redundancy and restructure; it makes any change holistic and more likely to be sustainable. Sustained safe delivery is a series of doing many different, often little, things well.

Many other businesses and government departments have operated in holding patterns, waiting for an office to return to business as usual (BAU). Those with this approach need to quickly appraise their goals and objectives and their risk management approach and activities.  There will be no return to BAU, and as the economy slips into recession, new cost-saving measures must be presented, or restructuring and redundancy might be their only option.  In the absence of systems and processes to manage delivery and risk, the organisation’s recession pain is unlikely to be temporary.

The good news is that strategic plans, process mapping, and allocation of crucial deliverables, can be expedited, particularly if the business engages all staff in meaningful and easily understood strategies, goals, and objectives.


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