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How do I teach people to use resources wisely?

I've been struggling with a dilemna and thought you all may be able to help. We are a smaller company where every penny counts. There is one department that doesn't seem to understand that money doesn't grow on trees. Wastefulness abounds there. Just a few examples include using large quantities of paper towels instead of the rags we get through a laundry service, and buying little luxuries like space heaters and fans when the buidling heating/cooling system works well. I've tried to lead by example by getting them "extras" while not increasing any budget. I show (and tell) them that I take the time to negotiate and find ways to get more for less. This has only led to this department expecting more things, regardless of the cost. I've explained that as a small company, we all share in profits. Their performance reviews are partly based on initiative and finding better ways to do things, and they say they understand. I almost feel like I need to be a parent figure and teach them the value of things, but should I have to do this for grownups? If so, how?

Answers

Topic Expert
Jaime Campbell
Title: Chief Financial Officer
Company: Tier One Services, LLC
(Chief Financial Officer, Tier One Services, LLC) |

(1) Does your role include authority over resource allocation? And don't most companies have an approval process for spending? And limit authorization for spending? Determine a threshold - it's not really a penny - over which expenditures need to be authorized, or need to be carried out by someone in Purchasing. Maybe every penny counts, but in reality maybe every $50 counts, or every $1,000 counts. Get clear on that for the company.

(2) Different people have different relationships to money. Yours isn't right and theirs isn't wrong. Yours might be more in line with a financially healthy company, that's all. Just because they don't share your viewpoint doesn't mean they are children. They certainly don't want to be treated as such. They have their own priorities and apparently the authorization and ability to execute transactions. Someone approved that situation. Talk to that person. After you ditch the "right/wrong" mentality and replace it with a "highest and best use" consultation.

(3) What's in it for them to have profit (which they have to share) as opposed to having a luxury (which they don't have to share)? Once you figure that out, you'll have more influence in your case.

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

You can:
a) lead by example;
b) put approval requirements in place for the purchase of these items that are being wasted.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

I will just caution/remind you of 2 things:

1. The "little" dollar amount you try to save MAY adversely impact productivity thus having a more negative effect on bottom line. As the saying goes, penny wise, pound foolish.
2. "Wise" use of resource is NOT equal to "less" use of resource.

Otherwise, comments above are spot-on.

Jacqueline Scott-Crossley
Title: Finance & Administration Manager
Company: Nationwide News Network
(Finance & Administration Manager, Nationwide News Network) |

I agree with the three comments mentioned above. You may also wish to consider instituting a 3-member cash management team to approve all purchases above a particular limit. The selection of course will be most critical and must be individuals who are able to strike the balance between conservation and crucial needs of the entity.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Can you share parts of the P&L to them to show them what a months worth of supplies cost and how it impacts the bottom line? When we started sharing the store P&L with each leader they were shocked at what things actually cost to run a store.
Another thing that helped us was to make it real. Ask them to think like owners, define what it looks like to think and act like an owner and then praise when you see someone do something to live into that trait. If you see someone recycle paper by using it for a note pad make a big deal about it. Instead of creating a negative atmosphere out of it you make it fun. We incorporated "ownership minded" as a piece of our vision for 2014 and by calling people out for being ownership minded actually got results. We see and hear people talk about ways to be resourceful all the time now. Don't expect results overnight; changing your culture takes time and effort but can be done with consistency.

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