Top management communicates the strategy. Teams working for cost-reduction champions then identify targets that are consistent with the strategy. What remains? At this point, execution becomes the priority.
Successful programs of continuouscost reduction usually feature weekly reviews by senior management, certainly in the early stages. For these reviews, controllers make sure top managers have simple but precise measures for discussing progress. These are their tools, when top managers meet in regular face-to-face appraisals with the line leaders who are implementing cost-reduction programs.
Unresolved issue: Managers definitely deserve to be compensated for executing a company program successfully. “Be wary of special compensation plans geared to cost reductions: it is difficult to get compensation plans of any kind right, especially those focused on special cost-reduction efforts.”
