Source: Havard Business Review (HBR Blog Network)
By Brad Power

When companies go through boom times, they quite naturally take their eyes off costs. But to maintain profits when revenue goes downhill, most CEOs call for cost cutting. The scalpel comes out, and while it’s necessary, it usually comes at a huge cost to employee morale.

For example Bank of America CEO Brian Moynihan recently announced plans to cut about 30,000 jobs across the company, nearly 10 percent of the work force, due to a downturn in trading and lending revenue and the continuing effects of the mortgage mess. And other major banks such as Citigroup, Goldman Sachs, Barclays, Credit Suisse and UBS have started laying off employees in the last few months.

These layoffs are usually driven by small teams who look for opportunities to “right size” departments. For example, at Bank of America, 44 senior bank managers and about two dozen consultants worked on a cost-cutting initiative called “Project New BAC”. They analyzed costs, set targets, and met with business and functional units. They solicited cost saving ideas from employees, then prioritized and presented them to senior managers.

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