SG&A Performance Management

Selling, General & Administrative (SG&A) expense is top of mind for many organizations right now.

Simple SG&A Value Map example

Everyone in the enterprise has an impact on SG&A expenses.  From your salary, to the office supplies you use, to the travel you take on behalf of the company.  It’s everyone’s job to help maintain and control these expenses.

SG&A spend should be optimized at the “right” level to help deliver on the promises of the organization.  If they are at too low a level, sales revenue will suffer.  At too high a level, profitability will suffer.  There are at least four approaches to impacting SG&A expenses, including

1. Removal (or cutting) expenses
2. Reduction of expenses
3. Avoiding incurring the expense in the first place (or avoiding future expenses)
4. Managing expenses in line with plans and expectations

The goal is to get to the right level of expenses that allow the company to sustain growth (revenue) and be profitable (operating margin), while delivering goods and services that attract and retain customers.

This is where managing the performance of SG&A is important: it’s not just about reporting on where you are with SG&A, but also about determining what’s possible, setting targets, keeping people accountable and understanding the impact of SG&A.

UPDATE: Click here for a copy of the handbook on SG&A Performance Management.

This handbook explains some approaches to managing the impact that SG&A expenses can have in the organization.  To that end, it will be especially useful for anyone in Finance, I.T. and business management – at all functions and layers of the organization.  Hopefully, some of the ideas and approaches in this handbook will help you do your best thinking around optimizing SG&A expenses.