Low overhead costs are essential to profitability; often they're closely tied to industry leadership and high economic returns. Yet eliminating excessive overhead can be tricky. Often, costs are "hidden" or duplicated in business units and at the corporate level. Rapidly growing companies can lose control of costs. In mergers and acquisitions, cost reduction is frequently both a major deal promise and a disappointment.
G&A: Turning the back office into an accelerator Watch this Bain & Company audio slide show on why building leaner, more effective support services delivers top- and bottom-line results.
Bain's study of companies in industries ranging from consumer products to financial services to energy shows that strategically trimming and reconfiguring support functions such as Human Resources, Finance, and Procurement is smarter than making wholesale cuts. Done right, it can improve the efficiency and effectiveness of critical processes while also reigning in costs. We have helped over 400 clients achieve savings of 10% to 50% while improving service to internal and external clients.
Bain takes into account each client's strategic goals and customer requirements. We run each cost center through a set of diagnostics, which includes benchmarks and best practices, to find and rank opportunities for savings. There are three broad areas of focus: reducing use by determining which support services are important to the customer or business; redesigning services by dissecting essential processes and eliminating steps that don't truly contribute to the business; and, restructuring support services so that they can perform the most effectively at the lowest cost. This is the hardest to do, but usually has the biggest impact. Tracking systems ensures that results are not only on target but lasting.
To find out more about Bain's work in this capability area, please contact the practice.
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