“All costs are in the bill. “Said the famous comedian Jacques Pater. Purchases of goods and services represent on average 60% of the turnover of European companies (source Eurostat). Controlling their costs is a condition of their economic performance. The Directorates General and Finance, logically motivated by the subject, continue to put pressure on buyers. But how far should one go in this logic before falling into the caricature of cost reduction, that is to say the cost killing, of which everyone knows today the limits. How to surf, if it exists, on an optimum? According to the cultural orientations of the organization, there are two distinct approaches: military management or ecological resource management.
Military management of resources: priority to tasks
This is a way of proceeding which leads to an authoritarian reduction of resources allocated to a production activity. The way in which our nation has sought to reduce its operating costs, such as pension reform or the introduction of the 35-hour law, is a contemporary example of a method of military resource management. The aim of this strategy is to track down all sorts of wastage in terms of machinery, equipment, energy, capital, personnel, etc. Proponents of this approach consider that the average human being does not like work and that he will try to avoid it whenever he can. They also believe that human beings do not like responsibilities, That they seek safety above everything and therefore they prefer to be run. To achieve their ends, the proponents of this tough policy set non-negotiable objectives, introduce new mandatory procedures, introduce stringent controls and handle the carrot and stick (Mac Gregor’s Theory X). This posture reinforces the behaviors of power / resistance throughout the organization.
This type of strategy is generally effective in the short term, but as in any constrained system, its effects are not sustainable. Many strategies of circumvention are put in place (“development” of the reporting, overexploitation of the faults in the procedures or application of texts to the letter, denial of responsibility, systematic opening of umbrella, resistances of all kinds …) Repeat the reduction process to address these circumvention costs. It is understood that the results are very volatile and the achievement of an optimum in the control of costs appears ephemeral with such a strategy. An example is the highly controversial effectiveness of the 35-hour law, which was originally intended to reduce the cost of unemployment insurance.
Ecological management of resources: priority to tasks and people
The aim here is to achieve lasting changes in behavior towards a more intelligent consumption of resources. This second approach has its effects in the longer term. Implementing ecological resource management is anticipatory and requires more time than the guideline approach described above.
Proponents of this approach rely more on consensus-building at all stages of the process. The work in multidisciplinary teams is strongly encouraged, the objectives are co-built and then declined at all levels of the organization. This approach also has pedagogical effects: it promotes synergies and the development of transversal skills. It encourages creativity, responsibility, innovation, self-realization. It stimulates the desire for continuous improvement of processes, the quest for excellence and the practice of change management within organizations.
In Sweden, the implementation of pension reform or, in Denmark, the employment policy of older workers are good illustrations of this method of ecological resource management. The process of change in Sweden lasted for 12 years and still today, according to general opinion, still has excellent results.
To access this way of managing resources, companies must also consider Mac Gregor’s Theory Y. In this theory, members of companies consider that making physical or mental effort is as natural as having fun or resting. The individual is capable of being realized if it is associated with the objectives of the organization. The satisfaction of the constituents promotes their commitment and leads to the improvement of the processes which reinforces, in turn, the satisfaction. We can guess that companies that adopt this approach will be able to surf the wave of an optimum gained by consensus.
Controlling costs is everyone’s business. Some organizations are better prepared than others to embark on virtuous paths and achieve lasting results. They are the ones who, to paraphrase Clemenceau, think that controlling costs is too serious to be (only) entrusted to buyers