Aligning organizational structure with corporate strategy requires financial “rethinking”.
In difficult economic times, it is not unusual for organizational leaders to demand across-the-board cuts of some arbitrary percentage to achieve bottom-line results.
Unfortunately, that approach often cuts into the “muscle” of critical functions that are vital to the successful performance of the enterprise and its future viability.
As an alternative, activity-based cost accounting quantifies the cost of specific work activities throughout organizational systems.
This approach to redesign helps the organization recalibrate how and where work can be better aligned with corporate direction.
The enterprise can achieve not only better organizational performance with this method, but also bottom-line efficiencies that improve financial results.
Phlebotomy—the ancient practice of bloodletting—seemed logical when medical science centered on the belief that four humors made up the human body: yellow bile, black bile, phlegm, and blood. It was thought at the time that an ailing person could be brought to good health by vomiting, purging, starving, and bloodletting. Unfortunately, in the latter instance, any number of the sick bled to death! By today’s medical standards, the practice is considered quackery. Now when a patient is ill, the condition is diagnosed extensively until the source of the problem is identified. If an operation is required, the repair is made with surgical precision.
Oddly enough, phlebotomy continues to be practiced on the body “corporate” in any number of organizations, where the four key elements are considered to be: capital, equipment, product (services), and people. A poor-performing organization, like an ailing patient in ancient times, is “bled” of its people resource. If the economy turns down, more blood is let, until the enterprise either recovers, or dies. In rough economic times, it is not unusual for organizational leaders to demand across-the-board cuts of some arbitrary percentage to achieve bottom-line results—not unlike phlebotomy, where cuts were made on almost all parts of the body. Unfortunately, that approach often cuts into the “muscle” of critical functions that are vital to the successful performance of the enterprise, and its future viability. And, the reality is that once an organization goes through a major bloodletting, a.k.a., “downsizing”, “rightsizing”, or “rationalizing”, management will resort to doing it again and again. Invariably, the organization fails to achieve its performance objectives, and the scars of phlebotomy serve only to remind the employees who remain that they too may be the subjects of such savagery in the future. Trimming excess resource is certainly necessary from time to time, but keeping trim and fit on a regular basis should be the norm.
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