Most organisations reach for the same tool when costs have to come down. The board sets a target, finance divides it up, and every team is asked to find the same percentage. It's quick, it looks decisive, and it feels fair.
The evidence says it rarely works. After 30 years of helping organisations through change, I'd go further: it often leaves them worse off than before they started. There is a better way, and it isn't slower or softer. It's just a bit cleverer.
Why blanket cuts fail
Most cost programmes don't succeed. In a 2025 BCG survey of more than 2,000 people whose organisations had run a cost transformation in the past five years, only about 20% of programmes succeeded. One in three still relied on across-the-board cuts.
The savings don't stick. Blanket cuts leave you with a slightly smaller organisation and all the same inefficiencies. So the cost creeps back. Half of BCG's respondents said their company runs a cost programme every one to two years. That isn't cost management. It's a cycle.
The people who stay pay the price. BCG ranked blunt workforce reductions as the most disruptive lever it measured, with a threefold negative effect on engagement. A 2025 Kahoot! survey of more than 1,000 US workers found that 65% of layoff survivors had made a costly mistake or felt unprepared because nobody trained them for their new responsibilities. Nearly half said their morale had dropped.
Leaders regret it. Orgvue's 2025 survey of 1,000 senior executives found that 55% of those who had made redundancies after deploying AI admit they made the wrong choices. By early 2026, Careerminds found that more than a third of organisations that cut roles because of AI had already rehired over half of them.
Investors notice. Gartner warns that aggressive cost-cutting carries reputational and valuation risk, and that markets may see some cuts as unsustainable.
The fairness myth
Everyone thinks they know how to do this. Yet the blanket cost challenge is still the default. It's often defended as fair, because everyone shares the pain equally.
But it isn't fair at all. A flat percentage rewards the managers who built up the most people and penalises those who already ran lean. It treats a bloated team and a stretched one exactly the same. BCG found that blanket cuts also tend to fall hardest on junior and frontline staff, while the layers above them are left untouched.
It's a sledgehammer to crack a walnut. You can be cleverer than that. BCG's research suggests that a more deliberate approach can lift the odds of success from about 20% to 80%.
The retailer that did it differently
Within the last few years, I worked with a major retailer on costs across its Finance and HR functions. What made it unusual was how it started. There was no top-down target. The CFO and the HRD had agreed something simpler: they couldn't ask the rest of the business to make savings until they had shown they'd looked hard at their own teams.
We had good data. There was an external benchmarking paper on Finance, and for HR we had benchmarks on rewards, spans and layers. We used them to flag anything that looked out of kilter, then took each one to the person who owned it. Sometimes the benchmark pointed to a real saving. Sometimes it was wrong. One area looked expensive because of a complex structure, which made sense once it was explained, and wasn't a large amount anyway.
That work produced around 30 initiatives, which we sorted three ways:
savings within the sponsor's control, which could move quickly
savings outside the sponsor's control, which needed others to act
savings that needed investment first, to unlock more later
The teams chose what was possible in each area. Together we identified savings of around 10%. Some areas saved more, others less. That was the point: it wasn't one size fits all.
The savings stuck. The two directors kept going after we stepped back, with a cost czar running the approach.
How I approach cost reduction
Ask "of what?" When a board says "take 15% out of costs", my first question is: 15% of what? Some cost is fixed. Some has already been squeezed by procurement. What's left, the addressable cost, is usually smaller than the board thinks, and that's where the real work is. I sit with finance to find it, break it down by team and give each piece an owner on the executive team. A figure in pounds works better than a percentage. It says what the business needs and leaves the how to the people who run it. And once a saving is agreed, finance takes the money out of the budget from a fixed date. Until then, it's only a forecast.
Understand before you cut. I don't start by deciding we need 10%, or by looking for people to remove. I start by understanding what the business does, where its money goes and what it gets for it. You can cut something that looks expensive and make the business less effective. Equally, some spending has become normal simply because nobody has challenged it.
Look beyond headcount. People are the obvious cost, but rarely the whole story. I look at the money going on consultants, temporary resources and projects. What skills is the business buying, who decides, and does anyone have the complete picture? Often a business is paying repeatedly for outside help to solve problems it could learn to handle itself. External expertise has its place. The question is whether the business is choosing it consciously: specialist knowledge, extra capacity and building internal capability are different needs, and they deserve different answers.
Involve the people who do the work. They usually know best what gets in the way. But knowing a problem exists isn't the same as knowing how to investigate it, develop options and lead a change. That's where I come in. I work alongside teams, help them ask better questions and weigh the evidence, and hold them to account for taking things forward. When someone tells me there are no savings to be made, I treat that as a claim to investigate, not the end of the conversation.
The evidence backs this up. BCG found that when decisions were pushed down to the managers closest to the work, people were 50% more likely to say their company had tried to keep its best talent. In top-down programmes, only about 40% said changes to their roles and processes had been clearly communicated.
Making it last
I'll be honest: savings don't last forever. Even at the retailer, where the savings stuck, ten years on some of that cost will have crept back. That's what organisations do. The answer isn't one big programme. It's to keep going.
One discipline that helps is zero-based budgeting. Instead of starting with last year's budget plus a few percent, which guarantees costs grow, you start from zero and make the case for what you need. In practice, multi-year commitments make a true zero hard. So many organisations start from a low base and bid for enduring funding on top.
Whatever the method, a few things make improvements last:
someone with clear responsibility for keeping the work moving
a regular rhythm for reviewing opportunities, decisions and progress
the work built into how the business runs, not a project that fades when attention moves on
the skills and confidence of the people involved
If there's nobody obvious to take it on, part of my job is helping the business find the right person. Early on I may be more hands-on. But the intention is always internal ownership, not a permanent dependency on me. Gartner's research points the same way: the CFOs who deliver lasting savings are the ones who reshape culture and build cost-conscious behaviour among their managers.
Where to start
If you're under pressure to reduce costs, resist the sledgehammer. Instead:
Pick one area of spending that matters to the business.
Understand what the money is buying and what is driving the cost.
Involve the people who understand the work.
Before deciding what to cut, ask whether there's a better way to achieve the outcome.
It takes a little more thought than a flat 10%. But it's far more likely to work, and to keep working after the consultants have gone.
If you'd like to talk through how this could work in your organisation, I'm always happy to have that conversation.