Ten things to cut in the recession, before you cut your marketing – no. 4 – Executive Costs

4Well, the New Year doesn’t seem to have made things any better out there. In fact, not only is the economic outlook just as bleak with Big Al now saying we’re in a ‘prolonged recession’, it’s even got colder.

So, of course, cutting back on those non-essential costs is just as high on the Boardroom Agenda as it was before Christmas. As usual at such times, the knives will be out for the marketing budgets.

But, as shown in previous articles, cutting marketing is a ‘bad thing’, it leads to less business in the future. So here’s the latest idea in our series of ‘Oi, cut something else’.

No 4. Executive Costs

The key principle behind this series is that you must preserve your basic capacity to generate and execute work. So far, we’ve canned the Association Memberships, stopped having meetings, and outsourced the secretarial cover to India. Now what?

Well, here comes something much more painful. How many Directors does your business have? Does it really need all of them?

Directors are really quite expensive. They have nice cars, get bonuses, sit on leather chairs, and need secretaries to help them with their e-mail. A quick and totally unrepresentative survey has recently shown that getting rid of one director will save the equivalent of five junior staff.

Given that those five junior staff are the ones that actually do the work, and that what we really want to do is preserve our basic capabilities, then that seems like an easy decision.

It’s more complicated than that of course. Directors have usually been around a lot longer, and are therefore more costly to get rid of. Remember though – just because someone’s been around a long time, it doesn’t make them inherently valuable.

Also, there are usually ways round it – if they’ve twenty years continuous service, they might be ripe for retirement. A swift enhancement of a pension scheme – a promise of money in future years – might well replace a giant cash payout now, or for privately owned companies – a larger equity share or option package to take as an asset into a retirement plan. Think creatively, hire an HR consultant (cheaper, and easier to can than an HR Director, and probably just as good!).

You’ll probably find after they’ve gone that most of the essential things they did can be done more cheaply by someone else, or just don’t need to happen. And picking up the slack shouldn’t be too hard, as they were never really in the office much anyway.

One word of advice though – if your company is one of the minority with a Marketing Director, don’t make it that position you cut. That would be like a battleship chucking its sonar overboard to make it a little bit faster.

This, and the other nine items in this series will be the subject of one of the presentations at the CIMCIG Annual Conference, on February 11 2009. The subject is ‘Downturn Marketing: A survivors guide to the recession’, and you can see more about it at www.cimcig.org.

Ross Sturley is a Principal of Chart Lane, a strategy consultancy, and a member of the CIMCIG organising committee. And will probably never get any more work off HR Directors.

THis article was published in January 2009 on Construction News’ website.

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