I SPENT five years studying Economics. Three decades later, I remember three statements. So much for education.

The first is John Maynard Keynes: "In the long run, we are all dead."

The second: "There is no such thing as a free lunch."

The third, which is most relevant in the current context, says, "Mere parsimony is not economy." (Parsimony, in simple terms, is being miserly.)

Remember Uncle Scrooge? Some of us do business like him and pat ourselves on the back for unnecessary miserliness. Please don't get me wrong. I feel one must be careful in spending but not get carried away by this desire for needless cost cutting.

Cutting costs is about being smart. Take this instance. It was 11 pm and we were at the reception of an airport hotel in Bombay, as it was called then. With me was Shrini Bhat, head of Interact, Mudra's second agency. All I wanted was a room to crash. My friend was asking for a discount. I was shocked. How could a big hotel give a discount?

But they did give 40 per cent!

Since then, I have always asked for deals. Sometimes, I embarrass my children. But who cares? This is being smart.

Why does Mr Narayana Murthy travel economy class in India? Because he believes that business and economy passengers will reach the destination at the same time. Are you being smart in your cost cutting?

Cost cutting hurts employee morale
Often, we pay lip service to the human relations function. "People are our only resource," we say.

Yet, most cost cutting often involves people. It means pink slips, delayed increments, deferred perks and dumping of important activities such as training.

If people really mattered and if costs are an issue, managers must work that much harder to communicate with their people. In times like these, people need reassurance and hand-holding. Are you doing this?

1 | 2 |  

e-mail: Ramanujam Sridhar

Suggest a story idea! Write to us!