Academic journal article Journal of Accountancy

Smart Belt-Tightening. (Golden Business Ideas)

Academic journal article Journal of Accountancy

Smart Belt-Tightening. (Golden Business Ideas)

Article excerpt

Cost cutting is like dieting. If you do it sporadically, not only is it ineffective, but in the long run, you're likely to put on more weight.

Likewise, sporadic corporate belt-tightening is more likely to result in production backlogs, low-quality output, missed shipments, angry customers and diminished employee morale. Over time, it's going to cost the company far more than the few dollars saved from a one-time cost-cutting exercise.

So what's the alternative?

If you agree cost cutting is like sporadic dieting, then you'll see why you should resist setting a pounds-lost target and, once you've achieved it, celebrating with a banana split topped with whipped cream. You need, instead, to view dieting as a permanent change in lifestyle.

But if you think a sensible diet--or, for that matter, a sensible cost-cutting program--is tantamount to "three squares a day of raw celery," then it's unlikely you'll ever permanently change your habits. Instead, you've got to think of three satisfying portions a day of tasty, wholesome food. Translated to cost cutting, that means you're going to have to create and then sell a new culture to your management--and who better to undertake that project than any organization's accountants. …

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