Monday, February 16, 2009

A Culture of Cost Consciousness

My cousin and her husband have been teaching their seven-year-old about money. With all the news and panic about the economy swirling throughout every channel of media, they decided it would be good to help her understand what money was all about. Right now, money is far from the most valuable thing in her mind, so they needed to establish another more relevant currency: horse riding lessons.

"Now, Catherine," they told her, "if you leave the lights on in this room all month, that could cost as much as ten minutes of your horse riding." She may not comprehend the hourly rate of their trainer, but this correlation gives Catherine a clear frame of reference and a desire to reduce mommy and daddy's costs so she can keep riding.

It still amazes me how child-like an employee's understanding of business might be. Overhead, taxes, insurance, and profit margin might be terms they know, but are they pains that your employees feel? Do they fully understand how these matters weigh on your mind? Not likely.

While nobody wants to have open discussions about salary and compensation, what if the cost of materials in the supply room were clearly marked? What if the tally of each salesperson's monthly expenses were published... right next to their sales. Could your workers learn to see the wastefulness of a co-worker as a threat to his or her own income?

There are lots of expenses that add up quickly as a direct result of the lack of frugality on the part of employees. Electric bills, heating bills, travel and entertainment, and even regular repair and maintenance can all be reduced if people would but see the monetary value in something as simple as flipping a light switch or re-using scrap paper.

Labels: Cost Reduction, Economy