Cost Reduction and Control Best Practices E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 1034

Veröffentlichungsjahr: 2012

Beschreibung

Cost Reduction and Control Best Practices provides financial manages with no-nonsense, balanced, and practical strategies that are being targeted and used nationwide for controlling costs by thousands of companies in areas such as human resources, compensation, benefits, purchasing, outsourcing, use of consultants, taxes, and exports. These best practices are based on the trenches experience, research, proprietary databases, and consultants from the Institute of Management and Administration (IOMA) and other leading experts in their fields.
* Provides best practices and techniques for controlling costs within a company
* New chapters focus on outsourcing costs, downsizing, consultants' costs, and business tax costs
* Provides the latest strategies companies re using to control costs

Leseprobe

Contents

Title

Copyright

Preface

Acknowledgments

Chapter 1: Corporate Cost-Control Strategies

Controllers’ Corporate Cost-Cutting Plans

Bain Study Outlines Strategic Importance of Continuous Cost-Reduction Programs

Should Your Company Do Away with the Budget Process?

Use of Cost-Management Tools

Ten Most Effective Techniques for Enhancing Corporate Value

Computing the Value and Cost of a Flexible Capital Structure

Planning Capital Expenditures

Rooting out Corporate Fat During the Capital Budgeting Process

Benefits

Endnotes

Chapter 2: Human Resource Department Costs

Cost-Control Strategies

How HR Managers use Technology Applications to Control Costs

HR Technology

Top Strategies for Improving HR Efficiency

HR Metrics: Is “Roi or Die” A Myth or a Mandate for HR?

Applicant Tracking is a Top HR Application

Recruiting Function: Part of the HR Department?

Cutting Costs in HR Departments

Avoiding Costly Lawsuits

Health Plan Sourcing on the Web

Avoiding Costly Employment Lawsuits

Saving Money for Your Organization

Cost-Control Forum

Chapter 3: Benefits Costs

Best Practices

Cutting Benefits Costs

Data Analysis Can Help Cut Health Care Costs

Get Employee Input to Redesign Benefits Package

Creating a Culture of Wellness

Few Employers Absorb Health Care Cost Increases

Gathering Enough Information to Adequately Assess Health Care Costs

Cutting Rising Drug Costs

Costs Remain on Agenda: How Benefits Managers Should Respond

Different Strategies Yield Health Care Cost Savings

How Employers Fight Health Care Cost Increases

Disease Management Programs: How Well do They Really Work?

Why and How to Institute Disease Management for Employees

Steps to Help Cut Workers’ Compensation Costs

Cost-Control Forum

How Benefits Managers are Cutting Costs

Endnotes

Chapter 4: Compensation Costs

Cutting Compensation Costs

Recognition Programs

Pay Causes High Turnover Rates

Pay Plans to Deal with Future Growth

Using Salary Surveys for Market-Pricing Jobs

Generous with Severance Pay

Compensation Concerns: How to Handle Them

Setting Pay Ranges

Resolving Gender-Based Pay Gaps

Choosing the Best Salary Structure

Chapter 5: 401(k) Plan Costs

Controlling 401(K) Plan Costs

Tightening Oversight

Judging the Success of the 401(K) Plan

Negotiating Lower Recordkeeping Fees

Prepare for and Resolve a Dol Plan Audit

Avoiding Poor 401(K) Performance

Providers Offer Sponsors Plan Evaluation Tools

Dol Allows Plan Fees to be Charged to Participants

Bear-Market Pricing Structure Emerges for Brokers and Providers

Endnotes

Chapter 6: Training and Development Costs

Best Practices

Training and Development Costs

Case Studies, Strategies, and Benchmarks

Outsourcing

Getting a Training Budget Approved

Calculating the ROI of Leadership Training

“ROI Can’t” to “ROI Can-Do”

Developing Online Learning in-House

How to Sell an E-Learning Initiative to Management

Using Rapid E-Learning to Deliver Cost-Effective Training

Virtual Classroom Produces Immediate ROI

Forecasting to Predict ROI Training

Preparing for Growth Demands

How Training Managers Control Costs

Endnotes

Chapter 7: Accounting Department Costs

Best Practices

Cost-Effective Change in Accounting departments

Case Studies, Strategies, and Benchmarks

Reduce Costs and Increase Productivity? Give Staff More Responsibility

Shorten the Monthly Close and Reduce its Cost

AP Cost and Processing Benchmarks

Low-Cost T&E Automation

Modifications that Shorten the Close and Reduce Cost

Chapter 8: Accounts Payable Costs

Best Practices

Tactics in Accounts Payable Departments

Case Studies, Strategies, and Benchmarks

Cost-Cutting Initiatives in AP

Key AP Department Operations Benchmarks

Meeting Costs Come Under Corporate Scrutiny

Getting T&E Under Control

Form 1042-S and Form 1042

Accounts Payable and Technology

T&E Software: Reduce Report Processing Time

Chapter 9: Credit and Collections Costs

Best Practices

Improving Credit and Collections Cost-Effectiveness

Case Studies, Strategies, and Benchmarks

Electronic Delivery of Invoices

Improving Staff Productivity

Improve Use of E-Invoicing

Keep Sales from Selling to Customers that do not Meet Credit Standards

Deduction-Smashing Game Plan

Avoiding Credit Holds With Delinquent, Key Customers

Selling to Financially Troubled Customers

Collections

Chapter 10: Purchasing Costs

Best Practices

Cost-Control “Get Tough” Attitude

Case Studies, Strategies, and Benchmarks

Sourcing Methods for Services Spend

Improve Supplier Management Process

Reverse Auctions

Contract Renegotiation

Framework Cost-Savings Programs

P-Card Model Realizes “Hard”-Dollar Savings Goals

Controlling Services Spend

Manage and Control Indirect Spend

Supplier Negotiation

E-Sourcing Initiatives

Rein in Less-than-Truckload Costs

Benchmarks Help Achieve Performance Excellence

Cost-Control Forum

Cost-Control Practices

Chapter 11: Inventory Costs

Best Practices

Emerging Cost-Control Practices

Case Studies, Strategies, And Benchmarks

Periodic Review

Remove Spare-Parts Inventory

Vendor-Managed Inventory Programs

“Back-To-Basics” Techniques For Inventory Reduction

Innovative Inventory Management Strategies

Process Orientation

Removing Obsolete Inventory From Storage

Cost-Control Forum

Tips For Controlling Inventory Costs

Chapter 12: Export Costs

Best Practices

Strategies to Streamline Export Administration and Costs

Low-Cost Programs to Gain Customers

Internal Export Compliance Program

Expensive Compliance Lessons Learned

Ocean Freight Costs and Online Bidding

Documentation and Compliance Programs

Lc E-UCP Rules Reduce Letter-of-Credit Costs

Export Insurance

Exporting

Shippers’ Associations

Tradecard

Ensure that Forwarders Cut Costs and Maximize Profits

Pro Forma Invoices

Relationship with Freight Forwarder

Cost-Control Forum

Best Cost-Saving Tactics

Endnotes

Chapter 13: Outsourcing

Best Practices

Most often Outsourced: Human Resources, Finance, and Information Technology

Case Studies, Strategies, and Benchmarks

Risks and Savings from Outsourcing and Offshoring

Benchmarking Performance in HR Outsourcing Relationships

Outplacement Firm can Meet Downsizing Challenge and Raise Productivity

Leading Providers of Offshore Outsource Service Providers

Building a Successful Outsourcing Relationship

HR Outsourcing: Achieving Successful Outcome

Making HR Outsourcing Decisions

Outsourcing Finance and Accounting Functions

Cost-Control Forum

Tips on Outsourcing

Endnotes

Chapter 14: Downsizing

Best Practices

Downsizing at All Sizes of Firms

Case Studies, Strategies, and Benchmarks

Downsizing: When it does and does not Work

Downsizing Plan

Downsizing Best Practices

Exit Incentive Programs

Responsible Restructuring

Endnotes

Chapter 15: Consultants Costs

Best Practices

Buying Consulting Services

Case Studies, Strategies, and Benchmarks

Client Expectations for Consulting Services and Relationships

How Consultants Bill

What Managers Spent and Plan to Spend on Consulting Projects

Consultants Fulfill Key Strategic Goals by Using It

Chapter 16: Business Tax Costs

Case Studies and Strategies

Tax Strategies at Low-Tax Companies

Employee Telecommuting

No Age Discrimination when Company Cuts off Retiree Benefits for Younger Workers

Section 179 Expensing

Overpaying Top People

Avoid Deduction Limit when Paying Contractor Expenses

Endnotes

Index

Copyright © 2006 by Institute of Management and Administration (IOMA). All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Cost reduction and control best practices : the best ways for a financial manager to save money / Institute of Management and Administration (IOMA).

p. cm.

Includes index.

ISBN-13: 978-0-471-73918-0 (cloth)

ISBN-10: 0-471-73918-9 (cloth)

1. Cost control—Handbooks, manuals, etc. 2. Business enterprises—Finance—Handbooks, manuals, etc. I. Institute of Management & Administration.

HD47.3.C673 2006

658.15′52—dc22

2005013966

Preface

The United States is currently experiencing one of the strongest economic environments and profit rebounds of the past 20 years. Nonetheless, most businesses are still targeting areas in which to further streamline costs and ultimately set the stage for a resilient bottom line during the next downturn. Because of the strength of the current rebound, though, most top executives have altered their cost-control focus. How can they—and you—be certain about what to focus on next?

The appropriate focus can virtually be assured when you have the security of knowing that you are implementing the cost-control strategies recommended by your peers and other leading experts in the field. This is the purpose behind IOMA’s Cost Control and Reduction Best Practices, and the reason we created it four years ago.

As your company’s main line of defense against the rising tidal wave of costs, this guide will ensure that you are focusing on what exactly has to be done. There is no substitute for making decisions on a scientific basis, and this book ensures that you will not waste time and money by using strategies based on “soft” grounds—intuition, guesses, or the latest management fad. With this guide you will be able to identify the no-nonsense, balanced, and practical strategies for controlling costs that are being targeted and used nationwide by thousands of companies in areas such as HR, compensation, benefits, purchasing, outsourcing, use of consultants, taxes, and exports. These best practices are based on in-the-trenches experience, research, proprietary databases, and consultants from the Institute of Management and Administration (IOMA) and other leading experts in their respective fields.

We wish you the best of luck in your cost-control endeavors.

Acknowledgments

This book would not have been possible without the help of editorial contributors. We would especially like to thank the following for all their hard work and dedication:

Editorial Contributors:

Andy Dzamba

Tim Harris

Chris Horner

Joe Mazel

Rebecca Morrow

Susan Patterson

Brad Pickar

Mary Schaeffer

Laime Vaitkus

Special Reports Editor:

John Pitsios

Managing Editor:

Janice Prescott

Vice President/Group Publisher:

Perry Patterson

Chapter 1

Corporate Cost-Control Strategies

CONTROLLERS’ CORPORATE COST-CUTTING PLANS

Despite the strongest economic environment and profit rebound in the past 20 years for most businesses, companies are still targeting areas in which to further streamline costs. Because of the strength of the expansion, though, controllers at smaller companies have dramatically altered their focus—away from capital spending, where increases are now the norm, and toward areas such as health care costs and purchasing/materials costs, where prices still can be hammered away at (see Exhibit 1.1). An IOMA survey revealed that although hundreds of controllers at larger companies are still focusing mainly on capital spending, other areas are increasingly coming under the spotlight.

Exhibit 1.1 Most Critical Cost-Control Areas, by Number of Employees

Small Firms Identify Health Care Benefits Costs as Main Focus

A whopping 70% of controllers at small firms (less than 250 employees) now target health care costs as their key focus for the next 12 months. To do this, they are increasing cost sharing with employees; increasing co-pays, deductibles, and lifetime limits; changing to prescription programs with two or more tiers; and adding or enhancing voluntary benefits programs.

For the past few years, employers have emphasized cost sharing as the most effective means of controlling benefits costs, along with increased co-pays, deductibles, and lifetime limits. The shift shows that more companies are asking their employees to pay for more of the coverage. Employers large and small are using this approach. In many companies, all employees are now expected to contribute to the costs of their insurance, even for single coverage. Many also now offer a three-tiered system of contribution to insurance coverage across the board: the more money you make, the more you contribute toward the insurance. Most companies also offer a buyout of the insurance plan if an employee can show that he or she is covered elsewhere.

Changing to a tiered prescription drug program is the next most effective cost-control technique. Under these programs, cost sharing by employees increases if they choose brand-name drugs and decreases if they choose formulary or generic drugs. (See Chapter 3 for a fuller discussion of each of these approaches.)

Supply Management Best Practices: “Get Tough” Attitude

Controllers at both large and small companies place supply management nearly at the top of the list of areas on which they need to focus. This reflects their response to the economy and the upturn in business conditions. Specifically, it means taking a tougher stand on price increases and renegotiating existing supplier contracts when possible. It also means continuing to consolidate the supplier base, issuing blanket purchase orders for some goods, and shifting inventory to suppliers. At the same time, most controllers increasingly recognize their dependence on their suppliers’ control of their own costs; hence, they are looking across the entire supply chain and their logistics operations for savings.

Another best practice that purchasing managers now increasingly favor is global sourcing. Foreign-based suppliers are able to cut most companies’ materials costs by 30% or more, although the supply chain is longer and better planning is necessary. E-sourcing and e-purchasing processes are also gaining favor with purchasing managers, with about one in five now doing either or both. (These approaches are all described in more detail in Chapter 10.)

Controlling Compensation Costs: Reducing the Size of Merit Pay Increases

Controlling compensation costs ranks fifth on controllers’ list of where they are focusing their efforts. In this area, it is often best to take a cue from compensation managers who face this issue every day. Nearly half of these experienced professionals indicated that reducing merit pay increases was their top method for controlling compensation costs. In many cases, however, companies are combining reduction in merit increases with a new emphasis on performance and rewards to top employees, partially as a way to offset any resulting ill will, as well as to emphasize the “merit” portion of the merit increase concept.

Following well behind reduced merit increases are hiring freezes and head-count reductions. More than one-third of compensation professionals indicated that these were their most effective means of controlling costs. Far more creative and less draconian is to create a pay structure that distinguishes much more sharply between high and low performers. This approach ranks third in effectiveness, but has a much better impact on morale and productivity. (See Chapter 4 for more detailed descriptions of these approaches.)

Growth Stage of Business Cycle Alters Strategies

Given the current growth stage of the business cycle, controllers are, for the most part, no longer focused on reducing research and development (R&D) expenditures or downsizing. Inventory strategy, however, requires constant attention. The best way to control inventory, regardless of the stage of the business cycle, remains the periodic review. Identified by more than 60% of inventory managers for the past five years running is the periodic—daily, weekly, monthly, quarterly, or other time frame—seeking-out of slow-moving, excess, and obsolete stocks. This involves virtually everyone in the company who has any impact on inventory. (For more on this and other approaches, see Chapter 11.)

BAIN STUDY OUTLINES STRATEGIC IMPORTANCE OF CONTINUOUS COST-REDUCTION PROGRAMS

More controllers are working with senior managers to develop a new framework for examining and continuously reducing costs. Under this approach, top managers have decided that cost discipline will be a program, not just an implicit element of operations. Further, they expect this program to become a core competency.