The leadership team decided that giving a reward like 5% of the savings to that individual isn’t justified because “one person may come forward with the idea, but then it’s handed off to another team to actually bring it to life,” he explains. The individual who comes up with a tangible cost-savings idea receives an award like an iPad or other gifts totaling about $1,000, Bowen says. “So, they identified a new vendor, and we saved a million dollars a year from that transaction.” “Someone on our sourcing team identified that we were paying quite a bit more than we should be because it’s a fairly commoditized thing that you purchase,” he explains. “At this point, there are a lot of million and two-million dollar ideas,” he says.Īn example? The IT team buys SSL certificates (which secures websites from data breaches, phishing scams, or many other threats), he says. Employees at all levels and departments can submit ideas into an internal portal that has a “blog type structure,” and also comment on each other’s ideas, he says. However, as part of H&R Block’s Fund the Future initiative to cut costs, launched in December 2020, there’s an internal idea challenge where the company incentivizes employees to come up with ways to create savings, Bowen says. “We did do some kind of headcount rationalization last year as well looking at spans of control,” he says. So, I asked Bowen how H&R Block is approaching cost cutting. Cutting costsĪs this macroeconomic environment continues, belt-tightening has become more common. H&R Block announced a 7% increase in its quarterly dividend to $0.29 per share and issued a new share repurchase authorization of $1.25 billion, which is effective through FY25. The tax preparation company reported its most recent quarterly earnings on Tuesday, beating top and bottom line estimates. So we bought back $550 million in one year at a price of about $23.80. “If you go back to the beginning of the year, our market capitalization was like $4 billion.
“One of the ways, from a finance perspective, we’re able to add a lot of value is to take advantage of a really depressed stock,” H&R Block CFO Tony Bowen told me yesterday.
HR BLOCKBLOCK FREE
Free cash flow generation, technology, and cutting costs with the help of employees has made tax preparation less taxing at H&R Block.
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