Ford Europe recently announced significant job cuts to trim £138m of costs in its European operations in a bid to improve bottom line profits. This scenario is one facing many organisations, albeit often on a smaller scale. With this in mind, how can we improve profitability and become more successful in what we do? How can we transform ourselves from where we are today to where we want to be? And how can we speed this up?
A purely cost cutting approach is one with limited horizons as once people costs are removed (often one of the largest cost elements in a P&L), you risk also removing your corporate knowledge and ability to grow and change. We see this very often in our project and programme delivery work at Nine Feet Tall where rapid cost cutting measures are followed by reduced ability to transform, as capacity for change is limited. The alternate route is to find ways to increase capacity through efficiencies such as reviewing and changing business processes to deliver greater quality with less effort, for example finding smarter ways of working. New capacity can then be used to learn new skills, develop new products and services, take on new clients, look after them and generate growth for longer term success and sustainable value.
The challenge for Ford Europe is surely to find new ways to attract and retain customers, using technology to its advantage and appealing to new segments of the market with a compelling brand proposition. Significant in this journey will be transformation projects to make change happen faster and deliver results more reliably. New value streams and growth generation will not come from cost cutting. Pure cost cutting risks holding back this more ambitious agenda and finding the right balance is key. Getting the right workforce will enable the success in manufacturing based organisations as in our own professional services context but what opportunities are there within the workforce to make this happen and develop new capabilities? Is Ford Europe taking the quick fix route?What are the real costs longer term of recruiting in new talent to support growth?
