WHEN HEAD OFFICE BECOMES A LIABILITY
July 23, 2012 5 Comments
The most feared words in any field organisation, irrespective of industry, number of employees or revenues are “Hello, I’m from Head Office and I am here to help.”
I spent the first twelve years of my working life as a “Techie”, initially as a programmer, systems analyst and then as an I.T. Manager (the term ”Chief Information Officer” had not yet been coined in New Zealand in the early part of the 1970’s as we were still struggling just with data ), and my real titles were “Manager, Systems and Data Services” and also “Executive Officer EDP”.
In 1977 I crossed over from the customer side of the desk to “the dark side” and joined Digital Equipment Corporation (DEC) as a salesman and spent the next 25 years in the field in various hi-tech companies in sales and management roles.
In the last three years before my retirement in 2006 I took up my first real head office role as a Global Head of HR.
It was probably the worst career decision that I took in my entire working life despite the fact that I learned a lot, and benefitted even more from doing the job, but I also realised very quickly that someone who has spent most of their working life in the field should not end their career at Head Office.
The situation today for Global companies is that there are so many administrative functions that tend to be centralised at Head Office, with departments like Finance, Treasury, IT, Legal, Marketing, R&D, Engineering, Procurement, M&A to just name a few in the almost endless list, most of them supported these days by Shared Service Centres and Centres of Expertise.
Even worse, they seem to be able to justify their perpetual and continued growth even in tough economic times, generally at the expense of the field. One company I worked for, whenever it went through any “downsizing” exercises, always tended to protect the Head Office personnel using European employment laws as the excuse, and focussed headcount cuts in the rest of the world. I could never really understand the rationale that it made good business sense to decrease the number of people who were close to the customers and the markets, and just keep growing the Headquarters staff.
I have found that as companies grow, the HQ staff tend to get further and further removed from the field, the customers and therefore from the reality of what is happening in their markets, and yet at the same time they are the ones who take unto themselves most of the control of the business direction and strategy. I have also found that no matter how many people already sit at the Corporate Headquarters, they can always justify their existence based solely on their own view of how much benefit they bring to the business and how busy they really are.
They may actually really be busy, but I have realised over the last 40 years that many of the roles are “make-work”, very few of them actually deliver much benefit to the business and they tend to not be able to differentiate between busy-ness and busi-ness, having become just another overhead cost for the field to carry.
I have even met some Headquarters people who can spend their entire day handling emails and then go home at the end of the day feeling satisfied that they have achieved much. When not handling emails, people at Head Office can also keep themselves incredibly busy with office politics and intrigues, in working out a myriad of ways to arrange the numbers in the reports that the field are asked to supply on a regular basis, or in constructing barriers to hinder the ability for the field people to do their jobs.
The first problem is that being physically located at the corporate headquarters means that they are close to the bosses, see them on a regular and frequent basis, and have too many opportunities to sell themselves and their importance to the powers that be. The second problem is that they breed like rabbits on a Viagra diet, as the only way that they can measure their importance against their peers, being not based on delivering either revenue, profit or customer satisfaction, is by how many people they have in their slice of the Headquarter hordes.
Apart from legal and statutory requirements, Headquarter functions only have one solitary, true role in life which is to support the field functions in their endeavours to sell to and effectively service and support their customers, both existing and new, and to make life as easy as possible for the field organisations to do so.
However, I have met many Head Office people who seemed to be under the impression that even if the field organisation never sold anything at all ever again, the Headquarters would still continue to exist.
Great companies limit their Headquarters to the minimum number of people that is humanly possible, and push functions out to the field and closer to their customers, rather than keeping on adding more people in ever growing campus real estate at the centre. They limit the number of people sitting like spiders at the centre of a web, at the top of complex matrix networks that do little more than just measure what is happening in various different cuts and slices.
You can “count the beans” a hundred different ways, but ultimately the real test of business success is how many beans can you harvest every year and how many beans do you get to keep at the end of the year for the benefit of all your stakeholders.
As said by US aerospace businessman Norman Ralph Augustine “Two-thirds of the Earth’s surface is covered with water. The other third is covered with auditors from headquarters.”