The episode begins with Rob explaining the difference between reducing expenses and strategic expense reduction. Here’s a sneak peek:
Rob: Expense reduction can also be termed a ‘pricing exercise’ which can capture some short-term savings. Strategic expense reduction is really taking a longer-term view of the expenses that you are trying to reduce and how these align with business objectives.
A strategic look at this area is really factoring all three and aligning them with what the firm’s IG/retention schedules are allowing you to do. This is just one small example.
I will give you a great example – off-site records storage. So many firms are fixated on the cubic foot storage costs that they are incurring on a monthly basis and no doubt about it, it’s important, but equally important is what they are paying for destruction and for permanent withdrawal. Destruction allows you to get out of that contract, permanent withdrawal allows you to switch vendors or if you ever want to withdraw boxes and destroy them yourself. Obviously, retrieval is hooked on to both those charges. So, to me firms get fixated on give me the best cubic foot costs and the off-site vendors just hike up the perm out fees or the destruction, so you may be paying less on the storage but getting killed on both the perm out and destruction.