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Raising the Bridge v. Lowering the Water: Expense Management and Its Relation to Cost Recovery

By Robert C. Mattern

This article focuses on the issue of expense management and its relation to cost recovery. Many firms over the past four years have been focusing on reducing expenses in an effort to ward off the effects of the recent economic downturn. This is commonly termed “lowering the water” and has evolved into a go-to strategy. Many times, for instance, as part of an introductory call with a potential client, firm management will ask the question: How much can you save me? This savings-focused or lowering-the-water strategy is only exacerbated by consultants in the industry who focus on savings as a basis for their payment ' a business model which, quite frankly, is not in anyone's best interest.

However, there is an alternative strategy: Firm management can choose to focus on the recovery of costs in addition to savings ' this is commonly termed “raising the bridge.” What many firms fail to take advantage of is the fact that, by focusing on the recovery of costs where applicable, they can accomplish more to help their bottom line than most cost reduction exercises.

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