In the current environment, both companies and individuals are cutting back on spending, euphemistically calling it “cost reduction and efficiency improvement,” and are trying to save money.
However, our company has always been quite cautious and wasn’t confident that we could significantly improve efficiency while reducing costs, but we could at least achieve “cost reduction without sacrificing efficiency.” After cutting expenses, we almost never sacrificed efficiency, and things continued to move forward as usual.
Many people fall into certain misconceptions when deciding to cut costs. They don’t understand that the issue isn’t whether to reduce costs, but rather what exactly they’re reducing.
We’ve seen too many companies where the first reaction to cost reduction is layoffs, cut benefits, strict attendance checks, and stifled expense reports—as if simply making things difficult for employees will automatically improve the company’s situation.
These tactics may indeed reduce the financial burden in the short term, but they quickly lead to a strange situation: fewer people, more slacking off, lower efficiency, and ultimately less output; stricter systems, but even more problems.
Later, when you look back, you’ll realize that what they saved wasn’t cost, but trust and confidence.
When we cut costs, we almost always ask ourselves the same question for every penny saved: If we didn’t spend this money, could the task still be completed in about the same amount of time, without any compromise?
If the answer is “yes,” then this money is no longer considered an efficiency cost, but simply a premium.
Take business trips, for example.
For instance, visiting a client in the UK: a taxi costs over £20, while the subway costs a little over £3, but the result is the same: arriving on time, completing the meeting, and advancing the cooperation.
Therefore, as long as time allows and the subway isn’t on strike, it’s best to choose the subway. The little time saved by taking a taxi won’t change any substantial outcome, and the extra money spent won’t get the client an extra order.
You might interpret this choice as “being frugal,” but in my view, it’s precisely about respecting efficiency. Efficiency isn’t about how much you spend, but whether you pay an unnecessary premium for the result.
The same logic applies to accommodation.
If it’s just a short stay of one or two nights, I recommend a hotel. But for longer trips, an apartment is better. It’s not that hotels are bad, but many of the things they provide aren’t essential, yet these things are reflected in the price.
Having someone come to clean your room every day won’t necessarily make negotiations go more smoothly the next day.
However, being able to cook for yourself makes you more stable, saves time, eats more comfortably, and saves money during long business trips.
Since standard hotel rooms don’t allow cooking, eating out is almost always the only option. However, in places like Europe and America, dining in inherently comes with a high premium, with a meal easily costing tens of dollars or euros.
Therefore, it’s best to buy groceries in advance and keep breakfast under five dollars. This won’t negatively impact the outcome of business trips, client visits, or trade shows, but it will keep costs within a very reasonable range.
This approach to judgment isn’t limited to personal business trips; it can be fully integrated into a company’s daily operations.
When a company wants to buy a printer, it should first consider whether the device contributes to its core competitiveness. If it only performs printing functions, then there’s no fundamental difference in the result between a new and an old machine, so a used one will naturally be chosen.
The same logic applies to drinking water. A bottle of water costing twenty yuan won’t make employees type more high-quality text, but if the price is consistently, continuously, and irreversibly higher, then they’ll simply switch to a bottle costing fifteen yuan.
Employees’ reaction to this adjustment is surprisingly calm because they understand that this change hasn’t been passed on to them as a burden, nor has it affected their daily work. They also understand that no company is obligated to purchase more expensive drinking water for its employees.
The real need for reform often lies in those “seemingly reasonable job positions”.
For example, if a company originally had four clerks, and each person only needed four hours a day to complete their work, then maintaining the original staffing level would essentially be a waste of money.
In this situation, reducing the number of positions to two while appropriately increasing the salaries of the clerks would allow the work to be done while significantly reducing costs.
For truly important and irreplaceable positions, a smart boss would consider raising salaries during overall downsizing.
The reason is simple: the cost of these positions is never just the salary itself, but the cascading risks that arise from instability.
Compared to potential future misjudgments and delivery instability, a small salary increase is almost a minimal-cost hedge against these risks.
Overall, the company spends less money, but the spending is more focused and certain.
Therefore, when it comes to cost reduction, as long as the premise of “whether the result is equivalent” is always taken as the starting point, cost reduction itself is a positive and proactive endeavor.
What employees truly resent is never the company becoming more frugal, but rather the company’s panicked attempt to shift the consequences of low-level decisions onto them.
When employees see managers taking the subway, cooking their own meals, and living in their own apartments, instead of indulging in high spending while demanding their subordinates “weather the storm together,” they understand the underlying issues.
“Cost reduction without efficiency reduction” is not just a slogan, but a habit of judgment. It doesn’t require complex models or elaborate PowerPoint presentations; it simply requires honesty in every specific choice, honestly asking oneself whether the money is truly serving the desired outcome.
Many companies become weaker despite cost reduction efforts not because cost reduction itself is wrong, but because they refuse to acknowledge the fact that what is truly expensive is never employee salaries, but rather those expenditures that are considered reasonable but never generate results.
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