Wednesday, July 1, 2009

Cost Reduction without the Ax

I was struck by a story I heard on NPR yesterday - an economist was relating how KPMG in the U.K. approached their need to reduce their personnel costs by 15%. Rather than rolling out company-wide layoffs, they offered people in management 3 options:
  • move to a 4 day work week and have your pay reduced 20%
  • take a sabbatical for a period of time this year and have your pay reduced 20%
  • keep your job and pay exactly as it is today

Everyone effected was able to make the choice that worked best for them - time off each week, a longer respite to do other things, continuation of work and pay as usual. The result? The company attained their cost reduction goals and their management cadre felt as though they had been properly engaged in making important worklife decisions for themselves.

Giving people a choice is a powerful management tool, and - in my experience - extremely underutilized!

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