Intelligent zero-based budgeting

How to cut costs sustainably – and how not to do it

The traditional approach to cost-cutting sets an arbitrary percentage by which costs are to be cut with no knowledge of its impact on the organisation’s future.

The insecurity engendered by such an approach motivates the survivors to increase their efforts to survive but also reduces productivity because productivity depends on happy employees focussed on the corporate goals rather than their own survival.

A more sustainable approach to cost-cutting is depicted in the following diagram:

Perendie Business Alignment ® makes available on a digital platform a single picture of everything the organisation is aiming and likely to achieve, do and employ allowing and requiring every stakeholder to state the contribution they will make to the combined organisation, which automatically identifies who will or won’t be able to contribute.

As people define their future roles, they compare their required outcomes, activities and resources with their current products, processes and costs, causing far more radical and yet safer cost-cutting than is possible with the traditional approach, and aligning everyone and everything with the organisation’s goals.

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