Are you a CEO or CFO launching a cost savings or restructuring program? Maybe you’re an executive who has been charged with leading a program? In either case, here are some practical lessons learned to execute a successful program.
First, all programs have a life cycle so think of the program in terms of phases (Mobilize, Analyze, Plan, Execute, Closure) and each phase has specific nuances which contribute to the overall program’s success.
Overall Life cycle to Follow:
Mobilize:
- Sponsorship – Ensure the executive team is on board and assign a senior executive who has credibility within the organization to lead the program through the long haul.
- Establish a project management office (PMO) to oversee the program.
- Identify team skills from within the company required for a successful program.
- Set objectives and targets as an overall enterprise and by function.
- Assign specific targets and objectives to functional leaders and cascade down to ensure skin in the game.
- Define an approach and levers to identify savings opportunities.
- Agree on scope and sacred cows, if any.
- Governance – Establish a regular cadence for updates so the program maintains visibility.
- Develop clear guidelines for accounting for benefits and costs. Assign finance and HR support to validate.
- Tracking tools and processes – Develop tracking templates and train team members how to use them.
- Ensure a close loop w/FPA and accounting.
- Define a change management plan.
Analysis:
- Analyze P&L to identify the addressable spend (remove depreciation, amortization); Develop functional, business unit and enterprise views of the data as well.
- Functional owners should analyze opportunities and develop preliminary business cases to reach targets using savings levers identified.
- HR should support spans/layers, comp and ben review for the enterprise.
- Opportunities should include cost to achieve, benefits and steady state-run rate.
- A watch out – ensure ideas are structural changes that result in lasting savings.
- Consider how to approach cross functional opportunities like real estate & facilities optimization and IT support.
Plan and Execute:
- Establish Priorities -For instance, many functions will want to use IT to achieve their savings which could make IT a bottle neck in achieving the savings, especially if the IT organization’s bandwidth is limited by its own savings goals.
- Resource for success – Ensure approved projects have enough resources to do the job.
- Establish clear Benefits and cost tracking- Tie the results to the P&L and test the reporting for accuracy.
- Publish the progress to the team.
- Do not let up on program updates at executive meetings.
- Time employee reduction actions carefully and try to reduce the number of waves to avoid paralyzing the workforce into inaction.
- The Program office should hold regular deep dives with all functions to review status of approved projects.
Closure:
- Archive tools, templates, and deliverables especially for the next program.
- Find homes for project resources –who left their roles to work full time on the program.
- Celebrate success- Its usually a long haul and those people who drove the program results should be rewarded and recognized.
Final Thoughts:
Running a successful cost savings/restructuring program takes planning, resources, rigor and stamina.
Learning the do/don’ts and traps to avoid will help achieve the company’s goals.
