The popular cult classic, “Office Space,” satirized a company where job functions solely existed to hand off paperwork between departments. Superfluous functions “managed the managers” to ensure paperwork flowed smoothly. Employees were stumped when the consultant asked, “So what do you actually do here at Initech?” Unfortunately, the “Office Space” satire is reflected in many large organizations where superfluous functions exist. The most common superfluous functions are Quality, Strategic Sourcing, Corporate Strategy, Process Improvement, and Shared Services Administration. The existence of these functions dilutes accountability for results and they become organizational crutches.
Quality is important and should be part of everyone’s job. Large organizations try to drive quality by assembling teams of people to manage and measure quality in the organization. The quality teams dream up complex measurement systems rarely understood by the people doing the work. The common result is operational departments shirking accountability for quality. Eliminate the quality function in non-manufacturing companies and hold operations accountable for defining, measuring, and delivering quality.
Organizations set up strategic sourcing functions as permanent bastions for vendor warfare. The fight to optimize pricing and quality often costs the organization more than what is saved. Vendors facing customer’s strategic sourcing departments hike up their initial bids knowing a tough negotiation is impending. As an offensive tactic, the sourcing functions develop a complex array of measures to justify their existence through overstated savings. Strategic sourcing should be an initiative instead of a permanent function. The buyers in an organization can collaborate with operations to optimize vendor spend and quality on an ongoing basis.
Defining and planning strategy is an event, not a function. The strategic planning event actually involves several functions, including market planning, financial planning and operational planning. The strategy function rarely collaborates well with each of these functions and tends to work in a bubble. For example, the financial planning assumptions rarely tie closely with the strategic planning assumptions. The discrepancies create duplication of effort. Strategic planning and financial planning can be integrated and tied together into one process. Marketing should drive market planning and operations should drive operational planning. The CFO’s financial planning and analysis function can be the glue that ties the planning processes together.
Many large organizations have teams of people focused on helping the organization through process improvement efforts. While it seems to make sense to improve processes internally instead of spending money for outside consulting, most organizations grow tired of the internal process improvement teams. The internal teams are rarely exposed to what peer or leading companies are doing. The lack of exposure results in a lack of innovation and the inability to achieve the step change needed to compete. Leading organizations have folded process improvement into Internal Audit. The combination has allowed the companies to leverage the work already performed by Internal Audit and balance process improvement with the audit assessment process. The remainder is best left to outside experts.
Shared Services Administration
Shared services seems to have taken on a life of its own in many large organizations. Lengthy service level agreements, administrative invoicing, and complex process measurements have required organizations to have a team of people solely focused on the administration of the shared services functions. Many of our clients have simplified service level agreements to eliminate the need for the administration of shared functions. Finance agreements are managed within the CFO’s organization and human resources agreements are managed within HR. A stand-alone department focused solely on administering the shared services processes can be eliminated.
The bottom line is that most of the superfluous functions drive accountability away from operations and support functions. When accountability is diluted, performance declines. High performing organizations should seek to eliminate these superfluous functions and streamline.