✂️ Cost-Cutting: The Costly Shortcut to a Better Bottom Line

Let me say it plainly:

Cost-cutting is not transformation. It’s a cleanup exercise. Full stop.

I know the temptation.

The P&L isn’t looking good. Targets were missed. The board needs to see “progress.”

So what’s the easiest way to show quick movement?

Cut costs.

It’s quick. It’s easy to execute.

But here’s what it’s not: sustainable, strategic, or actually transformative.

Let’s break it down:

1. Cost-cutting ≠ Transformation

Transformation is about building something stronger. Cost-cutting is removing what already exists.

One is generative. The other is reductive.

It’s cleanup, not change.

2. Even When Necessary, Go Deeper

Yes, sometimes cost-cutting is needed. But why did we need to cut costs in the first place?

If you don’t address the root causes, poor strategic alignment, weak capability, and lack of prioritisation, you’ll be right back here again. And again.

3. Emotional & Cultural Fallout

Cost-cutting hits more than your budget.

It shakes morale, fractures trust, and bruises culture.

And unfortunately, the people side is often treated as an afterthought.

I once witnessed an HR Director shrug off a 5% layoff.

“It's just 5%,” they said.

That 5% was 300 people.

300 stories. 300 ripple effects.

Even a “small” cut creates real shockwaves that ripple across emotional safety, culture, and organisational health, three things that break fast and heal slow.

4. The Aftermath Is Underestimated

Letting people go might be operationally simple.

But picking up the pieces isn’t.

Projects stall.

Processes break.

Those who remain are confused, overloaded, and sceptical.

Handover meetings can’t fix what emotional wounds unravel.

5. The Rehire Regret

It’s not uncommon to hear, “Oh no… we shouldn’t have let them go.”

Why? Because those expected to step up didn’t.

Because capability was misunderstood.

Because the gaps cost more than the savings.

Many end up re-hiring for the same capabilities they cut, just under different job titles.

See point 2 again.

6. Stop Using Cuts as a Crutch

When transformation efforts stall or growth plans fall short, cost-cutting becomes the reflex.

But that’s not leadership.

That’s fear.

If you’re serious about transformation, you don’t pivot back to safety; you stay with the hard, strategic path.

7. Reputation Is Hard to Repair

Once a company becomes known for cost-cutting, the damage is more profound than just numbers.

You lose credibility with talent.

Trust with investors.

And belief from the inside out.

So, what’s the alternative?

👉 Shift to a growth mindset.

👉 Build the capability to adapt, not just cut.

👉 Diagnose the real issues, not just the symptoms.

👉 Treat people as assets, not numbers.

Cost-cutting might help you hit short-term targets.

But it won’t make your business stronger.

It won’t grow leadership.

It won’t elevate capability.

And it won’t build the future.

✳️ Leaders who default to cuts are managing survival.

✳️ Leaders who invest in transformation are shaping resilience.

Choose wisely.

🎯Want to see where you stand as a change leader?

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🎤I am speaking at Agile Australia June 2025

If you want to learn more about navigating The Two Speeds of Transformation between what is strategic and where you can bring iterative momentum

This topic is at the intersection of transformation leadership, Agile principles, and the reality of running large-scale programs. Many organisations struggle to balance Agile's fast-paced, iterative nature with the deliberate, strategic depth required for successful transformations.

This session clarifies what can and cannot be "Agilable" in transformation programs and introduces the concept of running at two speeds: one focused on flexibility and responsiveness, the other on alignment and stability.

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Till next week

Jess Tayel

Founder of the Transformation Leadership Institute and People of Transformation membership & community.

Enable Organizations to Become Future Fit Through their Transformations & Change efforts.

Elevate Change & Transformation high-performing leaders to soar above the sea of sameness and achieve new heights in mastery, influence, & impact without the drag of going solo or slow progression.