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Austerity Measures

Austerity measures for businesses are something I find confusing. From a person looking outside in, they appear to make sense, a VP says, “our company now spends 75% less on ‘non-essential’ activities, such as Christmas parties”. From the inside out, you have to wonder why the money was ever spent in the first place.

The reason for the activity is that the investment was evaluated and determined to have outcomes that were worth the investment, supported by a business case. So what happens when austerity measures are introduced and how are the effects of divestment measured and evaluated? I would suggest that austerity measures are generally a harmful anti-pattern1, and that the impacts are not often fully understood.

I would also argue that once austerity measures are in place, it’s difficult to restore the culture of the business or organisation which may have existed before the measures. However, if the decision means that a business can remain operating verses failing, austerity measures may be the only solution.

Here is one example:-

Paper and pens

The stationary cupboard will be locked, and an employee has to prove they need the item by showing the previous full notepad or empty pen.

Cost saving: Small


” … employees attending meetings forget their notepad, and take another. Leaving them with multiple half-empty notepads. This is wasteful …”

What is meant to happen: Employees will remember to bring their notepads to meetings, and will ensure they use every page of every notepad they are given. Also, the environment will benefit from a reduction in wasteful paper use.

What will happen: Employees may not be able to take notes or ideas in meetings, they will spend time firstly trying to find, and then asking others for paper and pens.

There is also something more subtle that could be happening, and that is the reason why the notepad was forgotten, there could be many reasons, but one could be that the person is consumed with their value-adding task, and simply forgot their notepad.

Perhaps more importantly, how does this make the employee feel if they have to ask for a basic work commodity? It’s certainly going to distract them from the activity, and having to ask interrupts someone else from their activity. This has now cost the time of at least two employees who could have been doing a value-adding activity. Perhaps, in having to ask the person may feel a sense of failure (at having forgotten their notepad) and a decreased feeling of self-worth (and morale).

The attempt to drive behaviour change by removing someone’s free choice can lead to motivational responses, such as reactance:

“When certain free behaviours are threatened or removed, the more important a free behaviour is to a certain individual the greater the magnitude of the reactance.”2

This can have a stronger deleterious effect than the initial problem …

Alternative solution: Provide paper in meeting rooms. Ensure it’s compatible with other notepads provided. Person can forget their notepad, and still have a productive meeting (and be able to compile their notes afterwards).