In a Saudi airline, the foreign expert, with his inimitable genius, performed a calculation that showed him saving an annual amount if the pilots’ meals were stopped on board flights, recommending that the senior management spend part of this amount in the form of “allowance” to be added to the pilots’ salaries monthly, and the rest belongs to the company’s treasury!
The company’s management “flyed” with joy at this savings in expenses, but the pilots were upset, as it was not acceptable for them to enter the plane with a “room” bag, or to be late for flights to buy food, or turn the cockpit into a table for preparing meals and drinks!
The intensity of this resentment increased after the repeated descent of the salaries of some pilots, incomplete without the new allowance, and the departments of flight operation and human resources were preoccupied between the exchange and non-disbursement, and months passed without it becoming clear to the company’s management that the “alleged savings” was nothing but a headache, so the decision was canceled, and it returned Things are as they were!
Unfortunately, some managers randomly suggest providing a “little amount” in the short term in order to please or impress the senior management or the board of directors, forgetting or ignoring that these “riyals” may cause the company greater losses in the long run, represented in the deterioration of the level of its services, and corruption Customer or employee experience.
Of course, no one is satisfied with wasting money, but if we want to reduce costs, let us start by controlling the manifestations of administrative extravagance - if any - such as reducing the degree of tickets for leaders on business trips, and the expenses of their stays in luxury hotels, if their travel is inevitable, and does not replace it with meetings remote.
But if reducing costs will affect the experience of the employee or the customer, then you must think carefully before making the decision to reduce, because the management may imagine an increase in profitability in one area, and it does not know that it will incur losses in other areas!
There are necessary costs, if they were reduced, and this would result in risks affecting the standards of quality, safety or security. Considering the reduction of costs from a purely “financial” viewpoint is a minor view, as the concerned parties must be involved within the company to ensure that all aspects associated with the reduction are taken into account.
Unless there is a clear financial waste in which no two differ, the reduction decisions must be studied extensively, and perhaps one of the best areas of saving is to review the contracts of suppliers and contractors. Purchasing through a single agreement serving the Group and its subsidiaries with a single supplier, you can imagine the savings achieved, without a negative impact on internal or external customers.
Therefore, I always advise that the journey proceed from the "Procurement Department", as it is a mine for many ideas that contribute to reducing costs, either by renegotiating with suppliers or even changing them if necessary, the supplier compensates with other suppliers, as for employees and customers, there is no alternative for them !