4 easy-to-spot tell-tale signs you can save on headquarter costs (4)

In the previous post, the oversized headquarters as one of the biggest organizational wastes was addressed. Oversized corporate departments are a black hole attracting valuable resources, scarce cash-flow and lots of energy.

I’d like to urge you again to consult your local managers and local HR. They can point to the waste in the organization in fine detail. But as I said, these good people are kept away from you by your army. Discuss the four topics in these posts directly with your local management. If they experience (one of) these, you know where to improve your organizational efficiency.

The first was complexity in the hierarchy of the organization. Do not sustain organizational hierarchies that ask for more than two reporting lines. Simplify them, and put responsibility back where it belongs. You probably can cut a few expensive positions along the way.

The second was about corporate visits. Check with local management how much time they have to spent on corporate visits, and what they do to prepare (required by the visitor as well as on their own initiative). Reduce the visits as well as the requirements for preparation to a minimum.

The third post addressed additional data requests from corporate. Check with your local management what kind of data requests they receive, whether they serve any real purpose, and if so, whether the time spent on it (both locally and in corporate) justifies the benefits.

In this post I’ll address the fourth and last topic – specialized corporate departments. Check your full organizational chart, and look for the corporate departments. You know you have considerable waste in your organization when:

the org chart for corporate resembles a labyrinth.

You’ll be surprised how many organizations have corporate departments serving the same purpose. Especially if they are working independently from each other, they tend to triple the complexity around that topic. For example, some organizations have two or more internal audit structures. They will waste time on duplicating work, competing with their twin department (such as spending time on proving the other one wrong) and pulling at the same resources.

You will also often see specialized departments taken out of the department they originally belonged to. For example training and development sometimes is taken out of HR, and made into a separate department with its own VP and other high level managers. Again, time is wasted on duplicating work, competing with each other, and fighting for the same resources.

Another interesting approach is checking the number of pages of policies in the organization. In case the organization has more than 250+ pages of policies, you’ll find that many are unnecessary detailed intricate solutions for imaginary problems you never heard of.

These three problems almost always stem from only two root causes:

  1. internal conflicts between high level managers were not adequately solved, but patched by letting someone satisfy his or her own ego by establishing a separate department.
  2. a (part of a) department didn’t deliver, so an additional department was established to achieve the desired result.

In both cases, the underlying problem wasn’t addressed. Often out of good intentions: people didn’t want to hurt an underperformer too much, or didn’t want to blame someone specifically. However, these patches lead to inefficiency and corporate waste, and are therefore unnecessary expensive.

Solution

  • check which corporate departments serve the same purpose, and reduce them
  • check which corporate departments are responsible for a small part of what another department should be responsible for, and combine them
  • check which policies do not make sense or are over-complicated, and start cutting overhead in the department end-responsible for these policies
  • in the future, make sure underperformance or internal conflicts are properly solved, and do NOT result in adding a new corporate department

At the end of this series, let me emphasize once more: your local managers and local HR can point to the waste in the organization in fine detail. You won’t be able to get this information from your corporate army, who usually won’t do anything to jeopardize their own position. With these four posts, you know where to improve your organizational efficiency.

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