Executive Involvement Sets Direction
By
Dennis Sullivan
Chairman and CEO
Planning for 2012 is upon us. The economic landscape continues to
confuse the most informed business executive, and I find myself trying
to simplify my personal world at the same time. I have stopped looking
at my 401K, stopped trying to figure out the market and am just trying
to keep my ball in the fairway rather than break 90. Focusing on the big
picture is hard to do during times like these, with shrinking profit
margins and an increasingly competitive marketplace. Sometimes less is
more, and focusing on the basics may allow you to take a few important
steps forward. Like everyone else, banks, healthcare organizations, and
insurance companies are being challenged by new operating models with
lower cost structures. The days of growing only the top line are behind
us. The revenue from growth is part of the answer, but restructuring the
cost model is equally important.
An informed customer base is pressuring banks to limit fees; insurance
companies are expected to remain profitable with limited investment
options while still improving service and offering state-of-the-art
on-line capabilities. And every healthcare carrier in the country
struggles with the not-so-easy task of trying to bend the cost curve.
In this new business environment, some of our client executives have
become very active in helping to set creative and strategic expense
guidelines that shape the vision for their company. We are seeing the
leadership team help focus the organization on where and how we should
invest and what levers we can pull that would help reshape our expense
model.
With a high-level expense review, a senior team is able to pinpoint what
decisions they can make that will significantly impact the overall
costs. This “executive expense management” approach can provide a
framework for the organization to work within to meet expense goals as
well as sales and growth goals. It is a three-step process:
- Determine what the key cost drivers are in the organization.
- Evaluate the impact of current executive strategy on these
drivers.
- Evaluate alternative scenarios to reshape the expense model.
This is a strategy around one of
today’s critical business success factors—expense management.
Get your leadership team together and start the process. It is
real, it is tangible, and it should be the foundation for your
future strategic decisions about products and services.
