For many organizations, the term “cost management” is synonymous with panic. When the market tightens, leaders often have a “deer in the headlights” moment, defaulting to the fastest way to save money: layoffs. This is the single biggest reason why cost-cutting efforts not only fail but actively damage the company’s future.
Veteran CFO Duane Deason highlights that treating cost-cutting as a reactive, crisis-driven event—rather than a proactive, ongoing discipline—is a guaranteed recipe for failure. Layoffs are a last resort because they cripple capacity, devastate morale, and ignore the real sources of waste.
The Three Cost-Cutters Must Avoid:
- Cultural Complacency: Allowing bloat to creep in during good times erodes financial discipline.
- Superficial Cuts: Firing people while keeping redundant software licenses or inefficient processes intact.
- Rollover Budgets: Copying last year’s budget inherits old waste. Instead, embrace Zero-Based Budgeting (ZBB).
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