Penny Wise Pound Foolish?

Parochial Blog about some Cost Cutting in Shell Offices - no doubt repeated in many companies around the world during 2009

Those of us working in The Hague received a marvellously Orwellian communication on Friday, from the Director of Administrative Affairs (anyone remember James Hacker and Yes Minister?). From now on, catering will not be provided to offices, so no more Lunch and Learns - unless the meeting will be 4 hours long or with approval of unspecified "senior management".
It is a good example of what we will all face many times in 2009. Someone looking myopically at their own budget, under pressure from on high, and making the sort of decision that a view of the big picture would see as plain daft. The Sherlock Holmes (local pub) must have had a drink on us yesterday, anticipating a growth in business soon! Lunches and learns had become a good vehicle for all-too-rare knowledge sharing and collaboration, so it's goodbye to that for the time being. And what will the saving amount to? A couple of junior jobs and a handful of sandwiches!
The same e-mail informed us that stationery supplies would be cut back to bare essentials as well. Good to see, even if we can't seem to get full control on major projects, at least we won't be sent to penury by a wasteful oversupply of paperclips!

It is easy to sneer at this stuff, maybe even have a bit of fun in tough times. The problem is, for leaders looking to send signals and make measurable savings in short order, what is their alternative? Real sustainable savings don't come quickly, yet time is something no one has just now. At least our own company, unlike many, is making comforting noises about maintaining strategy, investment levels and long-term drivers like R&D. The truth is there are few easy options.
But we can still poke fun at the poor souls sending these e-mails. What about the canteen? Presumably in order to save a couple more low paid jobs and maybe the costs of an IT upgrade, we moved in C16 to a public-card based payment system for canteen lunch from December. Chaos! We were queuing out the door for our lunch, as the poor cashiers had to introduce a system involving many more clicks per transaction and extra scanning by them. The cost in lost productivity of staff during those four weeks was probably more than the lifetime savings in the business case for the change.
Fair play to them, they got the system stabilised within about four weeks. Actually, this one is an old retail lesson of mine. How many times, as field operations manager, did I see an initiative introduced from head office which must have looked great from behind their desks but forgot the simple fact that it had to be executed on site, in every transaction? Transaction time equals money and customer satisfaction on a busy site, and something just adding a few seconds changes the whole dynamic.
I wonder if the Albert Heijn managers who love their bonus cards and vacantie bons and the rest ever trouble themselves sit behind the till? Or even queue in line for that matter? (Drie in de rij? Kassa erbij! Who are they kidding!)? Now there is a company run by the finance department if ever I saw one! No bread on a Saturday lunchtime...because finance are scared of having to throw a few loaves away - who cares about customers? If those guys had ANY competition they would be dead in a month.
First lesson of retail. Be a customer, every day, every minute. Second lesson, be a cashier.
Sorry about that shoppers rant. Now, back to the subject in hand...
One other current Penny Wise challenge is for a category of services called Knowledge Process Outsourcing. I can't remember if I've blogged this before, but my GSXX team have managed to increase our productivity by about 30% by outsourcing the routine research and presentational work to a company called Evalueserve in India and to some of their competitors. Before, we did all the google and powerpoint ourselves, now we have someone at 25 Euros per hour who does it (much better) for us, and frees us up to do what we are paid for.
We have spread this gospel around Shell over the last couple of years, so now the category has grown to a million dollars or so annually, and there is plenty of further growth out there, from other teams who waste their time or employ alternative consultants at much higher rates. But 2008/9 has seen usage decline, as teams protect their own jobs, and there is a risk now that the category will be managed to minimise cost only (after all, it is real money out of Shell). Not much bigger picture thinking there!
I can rant all I like and talk about bigger pictures and more balanced KPI's, but I know I'm on weak ground. Tough times require tough messages and aggressive behaviours, and leaders have precious few good levers to pull. We'll see many more examples of Penny Wise e-mails before the downturn is past us. When we receive them, after we have our easy laugh at their expense, we need to challenge ourselves about what we would do ourselves if we were in their seats. It is not that easy!