Empowering managers: the ‘cost to achieve’ mindset shift
How can you turn a cost-cutting program into an empowering exercise for employees?
We all know that working with employees who go through a cost-cutting and process improvement restructuring program is not a "fun" exercise. The company is under duress. Cut costs! That is the message being relayed. Your peers might not have an optimistic mindset—quite the contrary. Some may even fear that cost-cutting will go so far that their jobs are at stake.
It's a climate of quintessential fear.
How do you turn this around and give members of the organization a sense of empowerment?
You give them a job to do. When people feel in charge, it is easier to entice them to cooperate.
When I worked on a company-wide cost-cutting PMO (project management office) at a prominent German bank, we found a "magic ingredient" that made the program run more smoothly and changed the way employees viewed the exercise.
What exactly did we do?
We elevated the cost-cutting exercise into a program that encouraged managers to change their perspective and approach cost-cutting as an opportunity for strategic reinvestment. The result was a program where participants were empowered to see these actions not as reductions but as investments that could enhance the company’s future stability and success.
The key to this shift was introducing a concept we called "Cost to Achieve" (CtA).
While this may sound abstract, the concept was simple: CtA reframes cost-cutting as a framework for purposeful, strategic investment. It’s not just about reducing costs but about saving money over a specific time frame with a clear purpose—redirecting it toward a mid- or long-term goal. This approach helps employees understand the business rationale behind each cost-cutting action and identify strategic levers to reach the desired outcomes.
Rather than approaching savings with a fear-based, reduction-only mindset, employees began to see themselves as architects of a balanced, strategic investment case, where the money saved today could be redirected toward meaningful improvements tomorrow.
Photo by insung yoon on Unsplash
What ARE GOOD EXAMPLES OF THE ‘Cost to achieve’ mindset shift?
When you involve business division managers by asking them to develop investment cases for cost reduction, you encourage them to assume ownership and take charge.
Let’s review use cases—those that do not involve reducing headcount.
Use Case 1: One could propose cutting costs by carefully reviewing IT applications and uninstalling those no longer needed.
This is quite a realistic scenario, as companies often work with legacy IT platforms, fusing different IT solutions purchased over the years. These solutions may not perform smoothly and could be replaced by more up-to-date, effective alternatives.
By giving managers the reins to review this (preferably with IT experts) and consider it a "return on investment" case, they’re given the opportunity to think strategically and apply their tacit knowledge. This also helps avoid the need to hire pricey external consultants and reinforces the expertise and ownership of those within the organization. In essence, it becomes a co-creation process.
Use Case 2: Investing in training so employees can remain within the organization and take on a new role in a growth area.
In cases where layoffs are considered, a "cost to achieve" approach might involve redirecting funds toward upskilling employees for roles in other departments, making the workforce more versatile and reducing long-term severance costs. Comparing this investment in training against potential severance packages—often in the six-figure range—makes a compelling case for sustainable, strategic workforce planning.
As a PMO representative, my role was to facilitate this process, encourage active participation, challenge business assumptions, and ensure that these cost-cutting exercises aligned with the company’s strategic goals. It wasn’t always easy to get division Heads and their direct reports to contribute, but the process proved both necessary and beneficial.
By not dictating every step, and instead giving those directly affected by the restructuring the opportunity to develop their own solutions and cost-saving measures, we tapped into essential tools:
Co-creation
Empowerment
Mutual learning
Leveraging tacit know-how
Co-creation involves working alongside managers to develop solutions together, fostering a shared sense of ownership. Tacit know-how refers to the practical, often unspoken knowledge that managers gain through their direct experience with tools and processes.
While the overall systemic pressures remained, and the general ambiance was still colored by the need to save money, this approach made the process more collaborative and, ultimately, more effective.
In the end, it worked.