Q: Our organization is facing a decline in revenue following several years of significant growth. We are in need of cost reductions, but my senior leadership team is resistant to this change. Many of them have never experienced a downturn before. What are some effective strategies?

A: This situation is quite prevalent. Recent surveys indicate that nearly half of UK organizations are seeking to reduce expenses due to current economic challenges.

Implementing cost cuts is a complex task that necessitates careful strategic, cultural, and operational adjustments. During prosperous times, teams often become accustomed to expansion in both personnel and budget.

As a leadership team, it’s essential to recognize this as a significant transition and communicate that message consistently. Engaging the entire organization is critical. Changing mindsets requires time, and to preserve your top talent, it’s important to ensure that everyone is on the same page.

Adopt a Precision Approach

The approach of making drastic cuts can be detrimental.

Instead, employ a precise strategy with targeted interventions. Establish a clear plan focused on specific metrics—prioritizing cost efficiency rather than aggressive growth.

Core Purpose First, Eliminate Excess

There has never been a more pertinent time to redirect focus toward your organization’s core mission. This clarity will guide all team members, including executives, in identifying areas of waste and inefficiency. The goal is to phase out activities that became established during periods of excess. Importantly, frame this renewed focus on core goals as a positive pivot.

Communicate Openly

Conduct cost-cutting measures with complete transparency. When job reductions occur, people prefer candid communication rather than sudden absences of colleagues.

Do not place blame on individuals for the organization’s challenges; instead, explain that external conditions have changed. Solicit input from your team regarding potential savings initiatives, fostering a collaborative environment.

Honesty and respect can galvanize support for your cost-saving measures. In contrast, a lack of transparency can lead to rumors and diminish productivity as employees become anxious about their job security.

Recognize and Celebrate Achievements

In difficult times, positive news is crucial. Celebrate milestones, such as maintaining jobs by eliminating certain non-essential perks.

Continue to seek new avenues for growth and opportunity. Companies that overly concentrate on cost control without exploring new business avenues are often the most vulnerable during significant market changes.

Persistence Leads to Recovery

Along with addressing immediate challenges, remain focused on the long-term vitality of your organization. Instill hope in your team that there is a promising, streamlined, and productive future ahead. In my experience, most individuals are inclined to support necessary adjustments, even if they involve short-term sacrifices.

Ann Francke serves as the chief executive of the Chartered Management Institute.