Incentive to reduce costs?
Discussion
I'm involved with a small company of about 10 employees. They are about to employ a new manager. They are keen to cut costs, utility bills, general maintenance costs, equipment and consumables purchasing etc.
At the moment there is no incentive for staff to look for best value, they just buy for convenience or get the same firm in as they have been using for years. with no competitive quotes etc.
The directors want to incentivise the new manager to cut costs, what is the best way of doing this? They want to give a bonus % of the amount saved, is this the best way? Is here a going rate % wise? Any other options?
At the moment there is no incentive for staff to look for best value, they just buy for convenience or get the same firm in as they have been using for years. with no competitive quotes etc.
The directors want to incentivise the new manager to cut costs, what is the best way of doing this? They want to give a bonus % of the amount saved, is this the best way? Is here a going rate % wise? Any other options?
Just to clarify, this is a small members only golf club, essentially non profit making, relies on membership which needs to remain 'good value'. Approx 5 office staff and 5 ground staff. Overseen by a committee who don't have the time to check everything.
New manager being brought in to get a handle on things, get spend on plant down and get competitive quotes etc. An example, a tractor was bought, when checked they paid top price from the local supplier, good friends of the ground staff, " always looks after us". When one of us rang the suppler 'incognito' we managed to get a similar quote at 22% lower without too much haggling. Same with other purchases, open account at the local builders merchant gets abused, 1 for them and 1 for me etc. No one checks the phone and BB bills and seeks better deals, the list goes on.
The manager is well aware this is why they are being employed, just looking at ways of extra motivation.
New manager being brought in to get a handle on things, get spend on plant down and get competitive quotes etc. An example, a tractor was bought, when checked they paid top price from the local supplier, good friends of the ground staff, " always looks after us". When one of us rang the suppler 'incognito' we managed to get a similar quote at 22% lower without too much haggling. Same with other purchases, open account at the local builders merchant gets abused, 1 for them and 1 for me etc. No one checks the phone and BB bills and seeks better deals, the list goes on.
The manager is well aware this is why they are being employed, just looking at ways of extra motivation.
bristolbaron said:
Sometimes buying for convenience is the most cost effective way. If someone spends a day hunting around for a £50 saving but has been paid £100 to do so you’re still down (Unless that saving is regular).
Increasing efficiencies is great, but IMO should only be incentivised as part of a total profit increase. A new manager needs to be focussed on the bigger picture.
Yes I can agree with this, I myself buy majority of my work kit from the same wholesalers, very rarely check the invoice, occasionally check other suppliers and I do pay more for some bits but don't have the time to go elsewhere. However in the case I'm asking about the staff do have the time, it's just easy for them not to bother, it's not their money, they just want an easy life, they buy new when an item can be fixed or re-used etc. Just wasteful. Increasing efficiencies is great, but IMO should only be incentivised as part of a total profit increase. A new manager needs to be focussed on the bigger picture.
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff