One time I confessed to him that I spent a sizable sum of the company’s money to commission a study it turned out we didn’t need. He smiled and said, “You have to spend money to make money!”
I liked him. But I didn’t emulate him when I became CEO. My job is to squeeze the most out of every dollar.
Count the money
In my book, the standout managers show in measurable ways. Sure, they’ve got character and vision and all that. But they also watch the little things, like expenses.
I want my executive team to live and breathe thrift. When I see them teaching employees to calculate the return they expect on an investment in, say, outsourcing payroll or redesigning the office, that just tickles me. It shows they’re treating our money as their own.
That doesn’t mean I badger everyone to reuse paper clips. If you push people too far, they’ll rebel or quit.
Reward smart spending
When you get everyone thinking about saving money, a camaraderie tends to develop. Managers and employees instinctively challenge each other to think of more efficient ways to work. They evaluate and streamline every process.
As the leader, I cheer them on. And I reward them. For example, a supervisor suggested that we use an online training program for our technicians rather than fly them to seminars halfway across the country. They benefit from the self-paced modules they can access from home, and they learn the same stuff at a fraction of the cost. I gave that supervisor a new DVD player and a $100 gift certificate to buy DVDs. Now that’s a few hundred dollars well spent!
I also make saving money into a game. Most months I distribute a breakdown of our expenses with year-ago comparisons. I’ll highlight an inflated figure and challenge my team to bring that number down by 25 or 30 percent. I’ll tell them, “Get this number under X, convince me you can keep it there and you’ll each earn a nice bonus.” As a result, everyone pulls together to chip in and think like business owners.
When to open the wallet
Sometimes it really is necessary to spend money to make money. I have three tests to help you decide when that’s wise.
1. Beyond an obvious cost-benefit analysis, I like to see long-term benefits that are somewhat assured. Investing in “cutting edge” technology is tricky because it’s often obsolete within a year.
2. I want someone on my executive team to step up and take responsibility for the expenditure. If a respected lieutenant says, “I’ll be personally accountable for making this investment pay off,” I’m more likely to approve it.
3. I need a Plan B. I hate all-or-nothing bets. As long as we spend incrementally, we can mitigate our risk and bail out before losing our shirts.
“Z” offers insights into what it really takes to get ahead. This 25-year veteran of the corporate battlefield has climbed the ranks to head a $100 million information services company. We have agreed to protect Z’s identity in return for his promise to hold nothing back.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/7881/lead-on-the-cheap "