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On October 7th ESADE Alumni held another talk in its Refresher Programme, "Why do cost-cutting projects fail or fall short? What must controllers do to avoid it?" by David Bertomeu, academic assistant in ESADE’s Department of Financial Control and Management.
Bertomeu began his talk by asking how many controllers there were in the audience and warned them, "I’ll probably pick on you!" The truth is that the few occasions when he actually did so served as examples of how controllers should work in order to improve the results of their companies.
Financial controllers play a crucial role inside the company because they are the interface between management and accounting. One of a controller’s most important functions is related to cost-cutting, so cost analysis is important. Bertomeu, obviously a great fan of cost-cutting, showed us how to improve cost-cutting schemes.
He explained that cost-cutting is based on several pillars, one of which is scope, i.e. knowing what you want and what you can do inside the company to spend less without affecting operations. Other pillars are monitoring and discipline at work – we must be strict and meet the targets we set. Similarly, it is essential to be stringent when calculating savings.
In-house selling is a must for controllers
Bertomeu emphasised the importance of getting professional help. Most companies have no experts able to help controllers in their different spheres of action, so Bertomeu recommended being humble enough to ask experts for help. The cornerstone of cut-cutting, Bertomeu explained, is the ability to sell the concept inside the company. It is extremely important for controllers to explain situations in a way that avoids uncertainty or fear in the company.
Using real-life examples of his experience in different companies, Bertomeu enlarged upon the main concepts he had outlined. His first example confirmed that controllers must be good sales people. In one case, failure to communicate a project well prompted one employee to sabotage certain actions to ensure he kept his job. "Controllers are entitled to poke their nose into all areas of the company, otherwise they wouldn’t be able to do their work", said the expert.
Bertomeu said that sales techniques can make it easier to reduce certain costs, and thus increase opportunities for savings. In addition, controllers must do their work effectively but let other workers take the credit.
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