General and Administrative (G&A) Expense Optimization: 5 Keys for Controlling Costs

Business leaders are getting smarter and more surgical with their areas of reduction to meet or exceed 2024 targets.

While markets have stabilized relative to early 2023, businesses are not totally in the clear. Investors are still expecting desired returns.

You can’t control the market or even your customers. What you can control are your costs.

Between the three major cash costs – CAPEX, OPEX, and G&A – G&A is the most immediately addressable and therefore a good place to start your review.

To ensure your organization is positioned to overcome business disruptions and uncertainty while generating sustainable future growth, consider these five steps to healthy G&A.

1. Be Empathetic and Find the Right Partner

The majority of G&A is people-based. Reviewing G&A for optimization opportunities inherently comes with an emotional cost – a process that can be difficult and create fear.

Find a trusted, compassionate partner who will put your people first.

Additionally, focus first on the roles required, not the people in the boxes in the organization. Creating unnecessary positions for individual people ultimately hurts their career development in the long run.

2. Start With a Strategic Vision

At the beginning of the G&A optimization process, it’s important for leadership to be absolutely clear on the vision of the company’s future and to ensure that vision is appropriately communicated and reinforced. Certain services, roles, and values are critical to the future viability and potential of the business – these are the areas in which the business needs to be great.

Next, build a cost structure that aligns to that company vision. The cost structure should enable high-value capabilities.

3. Take a Blank Sheet, Bottoms-Up Approach

Instead of “What can we cut?” ask “What do we need to run our business if we started a new company today?”

Framing the question in this way creates an optimal mindset shift, one that can help leaders make objective decisions based on a strategic methodology.

When looking at the company from a distance – as if from scratch – it becomes clearer that certain capability areas are the primary drivers of competitive advantage. It’s these functions that require greater investment.

Other functions don’t need the same types of changes or investment. Non-essential capability areas are prime targets for cost optimization instead.

4. After Optimizing the Org. Structure, Optimize Processes and Technology

Many organizations opt to move quickly. In doing so, they optimize their organizational structure and then get back to the normal course of business.

Halting optimization at the org level, though, leaves dollars on the table.

The processes and technology that underpin the business and are responsible for driving ROI must also be part of the G&A process redesign. When all levers in the business are examined during a business process reengineering, it maximizes the durability and utility of the G&A process. In other words, the firm won’t have to go through another major G&A cost improvement exercise or business process change every few years. It will be done right the first time.

Throughout this reset, it’s important to have cross-functional representation (Operations, Finance, Human Resources, Information Technology, Customer Experience, and other key stakeholders). Executing in siloes robs process improvement initiatives (and the business) of the intended value of G&A optimization.

5. Make It a Continuous Process

Cost improvement today is always preferable to tomorrow. Don’t wait for the next market correction or poor quarter to jump into action.

Instead, embed cost improvement into the annual review process, making it a continuous improvement initiative that becomes expected, planned for, and measurable. Ensure the cost structure is always in alignment with the strategic vision – if not, make appropriate calibrations based on your corporate objectives, peer benchmarking research, and key performance indicators that matter most to your organization. Rather than being forced into process improvement as a last resort, make it a proactive, diagnostic tool for a clearer, more focused future.

During these review periods, evaluate G&A metrics for patterns, progress, and new possibilities. Improvement opportunities can almost certainly be found in virtually every area of the business, so it’s important to have effective techniques and tools for enterprise-wide data collection. With the right depth and access to key data, business leaders can quantifiably build the case for optimizing the efficiency and cost of certain business processes, teams, and employees.

For transformative, technology-enabled solutions and expert support in optimizing costs across the enterprise, contact CrossCountry Consulting today.