If you're implementing cost-optimization or reduction initiatives as a result of government funding cuts, which departments are responsible for setting the strategy? Is it primarily finance, or have you established a cross-functional team?

It depends on the cuts, but I would say never forget the business. From my experience, especially in IT, the Business is crucial in the decisions on cuts, driven by the IT and HR departments.

The department impacted the most via the cuts would take the lead but Finance will be deeply involved and own the score card and verify budget changes and real spending. Finance does occasionally participate in strategy when they can provide some insight that may not be visible to the impacted departments

While finance often plays a key role in setting cost-optimization strategies, it is generally most effective to establish a cross-functional team that includes representatives from various departments such as operations, HR, IT, and strategic planning. This collaborative approach ensures that diverse perspectives are considered, fostering innovative solutions and enhancing the likelihood of successful implementation across the organization.

I believe Finance are the last to have a strategy - they will get the directive from the government and pass it on to the company i.e. there is reduction in funding. They may also to proportionate funding for all departments e.g. Operations, IT, Finance itself, Facilities, R&D, Manufacturing, Production, Purchase, Quality, BCM, Crisis Management etc.

Each of these departments will now develop or adjust their strategies for utilising this funding or better said - surviving within the given/ available budgets.

So, most appropriate approach will be a cross-functional team which will be guided by the overall strategy of the company. So, this CFT will be guided by the top management/ board.

The worst impacted by the reduction in funding will be Operations, while practically (with due respect to them) the best hit (means getting the most cut) may be Quality, BCM, Crisis Management etc.

Here, once again, the company's overall strategy, vision, purpose etc. will play role. e.g. if its an innovation company, they will have to provide good funding for R&D - for then this is most important.

Cross functional team is best suited in this particular case. Deliberation happens on what is non-negotiable or must have, good to have, nice to have; what are the risks involved and what can be done to minimize the negative impacts. 

Everyone has to speak in the best interest of the organization without creating environment of fear, overblowing the risks or over-projecting the benefits. In this group, no one belongs to individual departments, they all belong to the organization. However, it should be noted that when stakes are high, emotions also run high - so neutral or highly regarded moderators help.