As Nigerians inches out of recession, companies have been urged to cut only costs that create operational efficiencies for them .
Analysts at H. Pierson Associates in a report said companies should maintain costs that give them a competitive advantage and the capacity to exploit unique opportunities that emerge as the economy climbs out of the recession.
The report notes that “while still in a recession, the natural inclination for companies is to continue to cut most costs to minimal levels, especially through aggressive lay-offs, as well as investment and assets down-sizing.”
It advocated that for “more strategic cost cutting, companies should scrutinise their entire business model and seek out areas that require efficiency enhancements and provides significant cost-savings, such as through reorganization and structure realignments.”
“Included for smart cost cutting are areas of duplicated activities and processes that in the past were key, but currently have little relevance or value,” it said.
The message therefore is to be careful of extreme cost cutting that kills capacity to exploit opportunities in the forecast recovery.
H. Pierson Associates had in a report released in the thick of the recession urged leaders of companies to keep their organisations afloat during these challenging periods, and possibly perform well, as the economy emerges into more positive territory.
