Quality/Cost

Having just read a great article by Howard Adamsky on the importance of speed in hiring, with which I couldn’t agree more (and I would apply it to speed in most things in business really), it got me thinking about the argument of “Quality”. As he says, quality MUST be taken as a given when talking in terms of speed. Speed without quality is just a waste of time, and quality without speed is inefficient and often ineffective. HOWEVER, what we do consistently find whilst working global markets, is that it cannot be taken as a given when talking in terms of COST…and unfortunately this is often the area focussed on by “clients”. The problem here arises over the ability of people and businesses to analyse known costs vs. their inability to realise, analyse and understand hidden costs.

The simple point I want to put up for debate is that there isn’t a magic wand that a business has that can simply reduce costs with a wave and tap. Ergo, whilst it’s important to be as efficient for clients as possible, if Quality is wanted then Costs cannot be the focus of negotiation. And vice-versa if low Cost is wanted, no problem – there are suppliers and solutions out there that can fit.

Before this statement is debated, I do want to address what most people who work in the arena of cost control might jump onto and that is, costs can be reduced. Sure they can, however, you can only tweak a business to reduce costs by a few % points here and there, e.g. by increasing certain efficiencies and/or introducing higher cost control measures, but this is all usually translated into higher profit margins which a) usually dwindle down over time i.e. are not sustainable and b) are very, very rarely passed to the customer…You can also innovate in this area, but this is rare and soon copied. Basically, you can guarantee that every other business out there will have similar efficiencies in place and you will never outperform other businesses on costs long enough to make a real difference. It is not where you will make your name or add most value to your client. Your costing will be based on the cost of your model which is comparative to everyone else in your field, whether it be budget or premium.

So Quality and Cost are linked. Clients must begin to understand that whilst it’s important to cover cost conversations they should not ever separate it and focus on it as the point of interest. What should be focussed on is the Quality you get for the cost and if it looks too good to be true, it usually is! (actually – it ALWAYS is). I have no issue with clients that want low quality products and/or service. If that’s their strategy then fine. It has its place and makes sense/good money in certain situations. What I have a huge problem with is clients who pretend they want Quality, say all the right ‘Q’ things, get the proposals on the table using buzzwords like “innovation” and “dynamic” and “game changing” and then only talk about the cost, spending hours negotiating down, citing low Quality solutions. If you don’t want Quality then don’t ask for it. If you do, then you must be prepared to pay for it. Be rigorous, sure, be efficient by all means, but do not compare apples and oranges just because they are both fruit!

As a wrap I would also like to suggest that suppliers, particularly in my field of recruitment, do not help themselves. They seem to act in way that dictates that the only differentiator they have is cost (which unfortunately in lots of cases is true) and so they just drop their prices, hurting the rest of the industry. As a supplier you MUST understand the value proposition of what you do. You provide a service so make sure a) you know why it would be bought and b) why yours is relevant.

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About Rob Fanshawe

Currently MD, Asia for Xpand Group, living in Singapore with his wife and dog (golden retriever), his passion in life is simple, “people”. He loves everything to do with meeting and understanding them to helping them and businesses realise their potential through the resulting positive connections.

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