UK firms, including SMEs, are not planning their cost reduction activity in an effective way, a report warns.In a survey carried out by Deloitte, the global business advisory firm which employs over 135,000 people worldwide, one in three companies said that they did not set targets for their cost reduction activity. For smaller companies, the figures were even higher – 40 per cent set no targets at all before cost reduction activity. Deloitte warned that without targets it is hard for the companies to judge how effective the activity is.The survey also revealed a trend among companies to repeatedly carry out cost reductions. A quarter of the businesses surveyed said that they had undergone five or more cost reduction activities in the last three years."For too many firms cost reduction activity is strictly for the bad times, only to be abandoned as soon as business conditions get better," said Deloitte’s head of cost reduction, Patrick Doherty. "But companies need to think of cost-efficiency as a goal for all seasons."Companies said that they tended to undertake cost reducing activities because of external factors, such as profits dipping below expectation or mergers.Equally, Deloitte also said that many firms were not making their cost reducing programmes efficient. It cited the reliance on part-time teams who, once the programme is over, leave the cuts "rapidly to fester"."Removing costs from a company’s operations requires courage, endurance and consistency," said Mr Doherty.© Adfero Ltd

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