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Cutting Costs Across the Board: A Necessary Crisis Strategy?
In times of financial crisis, many companies are
forced to initiate cost-cutting measures. For most
financial services firms, this means headcount
reductions. If you Google "cost cutting strategies" you
will find approximately 1.8 million hits. Yet, many
executives will take the "easy way out" and demand 10
to 20 percent cuts across the board. This is not a
strategy. The expectation is that the "fat" will be
trimmed while the result may be just the opposite.
Consider this: An across-the-board headcount
reduction will impact the cost conscious manager the
most and impact the high-cost manager the
least−just
the opposite desired outcome. Cutting costs in an
area where the manager has always been conscious
of the number of employees required to do the
assigned work will, in effect, be cutting into the
muscle, not the fat. Conversely, a manager who has
operated with excess staff will be able to cut and feel
less (or no) pain. Unfortunately, this manager will
probably also be praised for their ability to weather the
storm.
One of the quickest and most equitable methods
of determining headcount requirements is
development of staff models. These models
determine the required time to complete the current
workloads and then determine the required number of
employees necessary. The models also take into
account vacations, sick time, overall staff experience,
volume fluctuations, and supervisory personnel. Staff
models also yield the invaluable benefit of being able
to forecast future staffing needs based on workload
volume increases or decreases.
The result of implementing staff models will be
the true identification of "fat" and the ability to trim
costs with the least negative impact on productivity
and service. Companies that have implemented staff
models rarely, if ever, resort to across-the-board cuts
because they have the ability to focus on areas where
cost reduction is deemed appropriate. In fact, many
companies that have long utilized staff models do not
look at headcount reduction as a first solution when
crisis times arise.
The Robert E. Nolan Company has a 35-year
history of helping companies develop simple, yet
effective, staff models. If your company is looking for
ways to reduce expenses in an equitable way, we can
help you pinpoint where they exist. Remember,
across-the-board headcount reduction is not a
strategy; it is, most times, a knee-jerk reaction.
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NOLAN ANNUAL BANK PERFORMANCE STUDY
The Robert E. Nolan Company will conduct its annual
Bank Performance Study in the first
quarter of 2010. The analysis—unlike any
other in the industry—starts with
line-of-business financial performance and computes
the underlying productivity, revenue, and cost factors
that contribute to success.
This annual study yields more than 1,000 unique
performance ratios for participating banks and credit
unions. Each performance factor is compared to the
benchmark (top quartile), median, and average of all
participants by size of organization.
You can register early to participate by calling our offie
in Dallas at (800) 248-3742. Further details will be
outlined in the first-quarter 2010 Nolan Newsletter.
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NOLAN COMPANY ANNOUNCES NEW REPORT
THE NEW ERA OF SERVICE DIFFERENTIATION
The Robert E. Nolan Company announces the
release of a new report containing research and
original articles on the topic of service improvement
and differentiation.
In the financial services arena, service
excellence has proven to be the dominant market
differentiator. Strong, sustainable relationships with
customers and agents are essential for long-term
success. This new report from the Nolan Company
provides a diverse, real-world perspective on this
complex topic.
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Sign Up for Nolan's Quarterly Newsletter
The Nolan Newsletter celebrates 36 years of
publication. Many industry executives have come to
rely on its relevant articles as a trusted business
resource. Covering the insurance, banking, and health
care industries, the newsletter features updates on
business and technology trends, as well as
proprietary industry study results. Recurring
departments include the Nolan Events page and the
Client Spotlight, a two-page section highlighting actual
client projects and results.
Click the link below to find out more information, view
past issues, or to sign up to receive a free copy.
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Previous Nolan e-Newsletters Online
Past articles of Bank Statement, as well as
Nolan's other e-Newsletters—Nolan
Spotlight and Trend Line—are now
available on our website. Follow the link below to
browse the archives.
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Nolan Events and Sponsorships
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