Citi cost cutting gets desperate

That Citi cost-cutting memo also included some harder hitting diktats relating to technology spend, Blackberry allowances and market data useage. But, it's not just the plebs on the shop floor who are making sacrifices. CNBC television reported Tuesday Citi cut another, more unusual cost: the construction of a $45 million Japanese garden near its executive suites.

James Gardner has just given me a bit of a pasting on his BankerVision blog over this (light-hearted) post.

In the interests of fairness, I'd recommend reading his piece outlining why it's perfectly sensible to make these kind of cost cutting moves.

James has a point. Cutting out uneccessary costs can help to create a leaner, more nimble organisation, better equipped to ride through the hard times and face off new competition. But, you have to be careful how you apply your cost-cutting measures if you're not to aleniate staff and stifle innovation. Saving a few pence on employee perks while the boardroom continues to enjoy extravagant spending is not good business practice.

You are right, Gardener is wrong. This sort of approach to cost cutting is what I have always referred to as the Stationery Cupboard Strategy. You reduce the amount of stationery to the point at which everybody has to run around like a lunatic trying to find a pen. Somebody gets their bonus because they can show how much has been saved on the pens budget; meanwhile the people doing the work in the business waste hundreds of man hours and morale suffers, all for the sake of 50p ball point pen. Cost savings have to be strategic - everything else is just fiddling whilst Rome burns.

Tsk! Tsk! 50p for a ballpoint sounds a bit over the top...is it one of those multi-coloured ones?  :-)