Senior managers fail to equip workforce to deliver cost savings £90 billion of costs set to return to UK companies.
UK firms have failed to create a culture of cost consciousness within their organisations despite three years of cost-cutting and uncertainty – threatening to reverse the savings made during recession, according to research from KPMG.
The research released today reveals a workforce not empowered or equipped with the tools and training to influence cost performance within their firms, despite widespread acceptance among employees of the strategic importance of controlling costs.
The study also highlights a significant gap in awareness and participation in cost management between frontline workers and senior management, as a result of the failure to embed a cost-conscious culture.
KPMG’s Cost Boomerang report warns UK companies fear that more than 95% of costs cut during recession – some £90 billion – will return to their cost bases.
Robert Bolton, Partner at KPMG Performance & Technology, comments: “Executives need to maintain their rigorous focus on cost management and take urgent measures to embed this focus throughout their organisations.”
The Capability Disconnect
Robert Bolton comments: “Broadcasting hopes and aspirations to the frontline is not enough. Management needs to understand their business from a frontline perspective, and ensure that junior ranks feel more connected to the business.”
Robert Bolton comments: “Any cost management effort not adopted by all employees is destined to fail. Organisations need to instil a greater sense of ownership among their middle managers and frontline staff. “It is critically important that senior managers ensure all employees are engaged in the cost management process.”
The Knowing-Doing Gap
Robert Bolton added: “Organisations must ensure that employees are empowered to drive cost management, by giving them the appropriate levels of accountability and freedom to effect change.”
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About Cost Boomerang
Cost Boomerang is a report by KPMG Performance & Technology. The report is based on opinion research among 425 staff among the UK’s largest 350 firms: 100 senior managers, 125 senior finance managers, 100 middle managers and 100 frontline staff.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.