Non-controllable Costs

One consistent theme in each company I have gone into is the idea of non-controllable costs. "Well, property taxes are not controllable." "We can't do anything about IT." "Energy rates are going to be whatever they are." Such statements come out at all levels of the organization -- even top management.

Consider this for a minute. Executive management is admitting that they are willingly spending money that they cannot do anything about. Is this a sign of a team that is on the top of their game? Would someone dare make such a statement to their spouse regarding the household budget?

Certainly some costs might be easier to manage than others. Some costs are approved "above my pay grade." Every cost can be controlled. Every cost has drivers. Every cost has opportunities for improvement.

Every line item of cost can have an owner, if management wants to manage. The owner can learn the drivers of the cost. The owner can understand the factors that affect the cost. The owner can take action to improve the cost and manage this action through the organization.

This attitude of non-controllable cost is a disease. It is a disease of laziness. It is a disease of complacency. When you hear such statements, know that management is inadvertently admitting that they are not qualified to manage.

When challenged with this, most will come around. "Yes, we actually can do something, but X, or Y, or Z must happen, or so and so must get involved, or...." With this start, you can now begin taking steps to focus on every item, on every project, on every cost -- even the difficult ones. This is the first step toward getting management's mind around change -- a change in attitude toward the future of the company.