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Back to Austeridad

Alberto Fernández Terricabras, Professor, IESE, University of Navarra


Wed, 02 Jun 2010 10:56:41 +0000 Published in ABC (Madrid)

Now that summer is approaching and the popularly known as "operation bikini" is starting, everyone remembers to lose weight. People are like that, we do what is convenient from time to time and thinking more in the external appearance than in the benefits that may represent, in this case, for health. As there is little time, many of us will go on very rigorous and unhealthy diets, which will help us to lose weight all at once but without generating good health habits.

It is exactly the same with companies. In good times they spend far more than is necessary or even reasonable. They accumulate fat in the form of too many people, too many unnecessary material goods and too many expenditures that are expendable. They don't take care to control spending. Until lean times come - which in this case we should associate more with the cold, dreary winter than with the hot, joyful summer - and we all think of improving profits by dispensing with expenses that were always dispensable. The crisis, like summer, has generated a need. In a study conducted at IESE, nine out of ten business owners said that with the crisis their business was devoting more attention to cost control and cost reduction.

There is something positive to be gained from everything and, of course, from the crisis as well. Now that some countries in Europe are already emerging from the crisis and that in Spain, at some point, we will also do so, it is good to remember the need to be austere. We must not confuse being austere, which according to the RAE means "simple and without any class of boasts", with stingy, which according to the same source means "miserly" or, what is the same, scrimping on expense. The stingy manager can jeopardize the competitiveness of his business; the austere manager will enhance it, using resources for those activities that really generate value and in the right quantity, without showing off or simply for his own benefit or that of a few. In addition, it will set an example to its employees, so that austerity will go from being the virtue of some people to being a value of all of them and of the organization, which will result in its competitiveness and its good work. To reduce costs, it is necessary to know what they are and their importance. If sacrifices have to be made, it is better to make them in those costs that generate more savings. In many cases, it is not necessary to make too many sacrifices, but simply to negotiate better with suppliers and avoid redundant expenses or those that add little value.

In the case of some specific costs, it must be explained to the organization how to reduce them. If someone does not know that fruit after a meal is fattening, he will not stop eating fruit for dessert. If we tell an employee to reduce purchasing and logistics costs, without giving him the appropriate training , he will hardly do it well.

But apart from analysis and training, the core topic will be the attitude we have towards the reduction of expenses because we have to dedicate time and change certain habits of expense. This may entail sacrifices. As the doctors say: to lose weight, it is not enough to do more sport, you have to eat less. Let us hope that our organizations will generate the good habits necessary to lose weight and thus, whether it is summer or winter, enjoy better health.