Why is it that when budgets have to be cut the future of the company’s people and relationships is not considered? Short-term actions are taken to save money now, which can have huge adverse effects on the future growth, structure and potential of the business. Let’s take a look at a smart way to look at budget cuts.

As we enter the last quarter of the calendar year, many companies are taking red pencils to their budgets and departments are feverishly looking to save money so that the year-end profit can be assured.

There is a sense of panic as little time is available and many of the important projects have already been committed to and should not or cannot be cut any more. Furthermore, management sees that in a few months time, a new budget year will start and the cuts can be re-activated. Unfortunately that rarely happens. Items that are cut are often treated like unfinished books that we promise to return to, but are permanently discarded with the bookmarks marking our last place.

So why is this an issue? Well, because the cuts that are made are the easy targets and ones that supposedly will not have an immediate effect on the business without considering the future.

Typically, in my experience, the cuts start with Travel. No more travel or radically cut travel, or business class to economy depending on how deep the cuts have to be.

So now, we are sacrificing internal and customer relationship building at a time when we need to develop these most: in a time of adversity.

I have heard many arguments for the benefits of video conferencing using the plethora of great software out there, but there is NO substitute for sitting physically with people and discussing things in a REAL face to face if you wish to build meaningful relationships.

The next cut is the Training line item. Always a good one because we can add training back in again next year and so no big loss right? Wrong. If we believed the training was important this year and we budgeted for it, then it was important for this year. Not to be cut again as it was last year and probably will be again next year.

Strategic projects are the next one to get the axe. Let’s stop thinking about the future of the business and act short term to ensure this years profits.

And then the last target is head count. At best a head count freeze and at worst cutting the job force.

All these cuts seem viable but they are all related to the future well-being of the business and affect our people. What is the reaction to these cuts by the average employee? How do we think they feel as they get cut off from their contacts? How do they feel when told we are no longer sending them on that vital training we promised to invest in for them? How do they feel when we stop thinking about the next innovation or strategic initiative? How do they feel when they are told they will be doing 2 jobs and that materializes into working 60-65 hours a week?

Budget cuts are a necessary evil in business, but we should be mindful of the impact it has on our people and the future of our business.

So when faced with that red pen or pencil, I would urge you look for alternatives and look at the cuts through the lens of not hurting your people or your future.

Have you faced this dilemma and what did you do? What alternatives have you taken the red pencil too?

About the Author:

I am the customer relationship mentor, who helps those responsible for their company’s most important customers, to build and maintain their customer relationships and keep them happy, so that they can protect & grow their business.

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