Monday, 22 December 2003

Corporate inversion to produce excellence

Losing that Corporate umbrella
Having worked in a number of organisations, conglomerates and enterprises, one has seen the tyranny of pointless political battles, internal markets, Russian-doll-empires and departmental rivalries that beset all good intentions of the board of directors.
The Organisational Chart
The Organisational Chart, possibly created in that dreaded PowerPoint or this time Microsoft Visio (See earlier blog on PowerPoint), creates the fertile ground for the at times credible generalisations that:
  • Working for the same organisation does not mean you gel as an organisation.
  • Each departmental function is an unchallenged monopoly in that organisation.
  • Collective responsibility of corporate goals is dispersed amongst departmental heads who work a double agenda of both trying to be efficient and the desire to succeed the incumbent corporate officers.
  • Responsibility is aggressively acquired from other units for successes and promptly evaded and blamed on other units for failures.
  • Employee value and talent is lost in the bean counting of cost-centre accountancy.
One is saying that the comfort of working under the umbrella of ABC Corporation is failing the corporation and stopping the corporation from evolving fast enough to respond to the change necessary for its profitability and survival.
The logic of proper outsourcing
Imagine your organisation being changed into something completely from what it is now. It now just consists of a board of directors with the ideas and capital for a particular venture.
  • The facilities department becomes a facilities management firm competing in tenders to provide a block of offices and run all the facilities necessary for a corporate headquarters and the satellite offices.
  • The legal department becomes a law firm providing legal advice to the company and any other companies needing that expertise for a fee.
  • The personnel management department becomes combined talent resourcing and payroll management firm managing all Human Resourcing needs for a market that includes your organisation and the departments that have become firms.
  • The finance department becomes a corporate finance advisory firm and facilitator for managing the board's capital interests in this venture.
  • The IT department becomes a service provider of end-to-end IT services to the organisation and all the firms employed by the board for the organisation. The IT firm also competes on the open market.
  • The marketing, sales and publicity departments become a PR firm with professional research and marketing facilities, holding a respectable PR budget.
This is the same organisation with a centralised core of the board with a clear set of goals, requirements and principles. Now, each firm competing on the open market to fulfil the requirements is faced with tougher choices to either perform or face extinction from competition.
The Organisational Chart is no more a hierarchy but a star with one reporting line between the office of the board of directors (the customer) and the firms that provide customer service. The complete inversion of corporate government.
The Board Expects
 For the fee the office of the board pays for each service they have acquired they should expect the following:
  • Clearly set contract service levels and penalties for default.
  • Professional customer service with performance metrics, which include bonuses for exceeding expectations.
  • Well planned and organised project deliveries that cut the muster of competitive market scrutiny.
  • Firm managements that can negotiate realistic timelines, costs, requirements and deliverables.
  • Considerable improvements if the service contracted is provided or the option to renegotiate or fire the service company if they under perform.
The Firm
The firms face the continual test of if their service is worth paying for; they have to cost and value every negotiated settlement balancing the provision of service with staying competitive.
 This would do wonders for the erstwhile department in these ways:
  • All resources that have survived for so long under the corporate setting but brought no value to the company would be exposed and offered severance terms.
  • Projects properly researched before any negotiations begin and only within the resources available to service that project.
  • Poor management within the firm would be under pressure to perform or depart.
  • The level of service required or the firm would require skilled personnel on better remuneration to fulfil contracts signed.
  • Market forces would compel the firms to adapt to trends more quickly.
  • The organisational issues which plagued the larger organisation and were buried the weight of internal rivalries would have a smaller field of play, but its impact would be immediately felt and dealt with.
The individual
How this affects all the individuals involved depends if you are on the board to demand or in the firm to provide a service.
If on the board your question would be - If I had to pay for this kind of service from an external firm, what should I demand and expect?
If in the service firm, your question would be - Would one get away with giving this level of service if someone had to pay for it?
The Utopian Organisation
The mindset of the organisational entity is completely changed and that is outsourcing in Utopia, if only the world were a perfect place.

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