The “Bureaucracy vs. Financial Results” Case

►THE BUREAUCRACY vs. FINANCIAL RESULTSCASE◄

 

THE NEED FOR SPEED-

Since 1996 we have shared with clients, “speed is the only competitive advantage in business that costs nothing”.

Increased enterprise speed tends to have no capital or cash expense associated with the improved financial outcomes it creates.  Simply stated, speed improvements have translated directly to the top and bottom lines on a 22%/78% split in most of our client cases globally.

Bureaucracy has never improved customer capture and retention and it has also never improved enterprise speed.  As bureaucracy grows enterprise and human speed slows, with variable labor and G&A expenses nearly always increasing at an exponential rate.

 

IN THE WORDS OF SEVERAL OF OUR CLIENTS-

It is our hope that what is described below does not apply to you and your enterprise, and if that is the case we applaud you for that accomplishment if partially or entirely due to your influence and leadership.  When people are hired, led, motivated and organized optimally bureaucracy cannot take root because bureaucracy is a foreign body within the circulatory systems of highly productive enterprises.

Bureaucracy ranging from what is noticeable to what is excessive adds overhead, slows decision making, distracts from customers and financial objectives, creates internal friction, prevents risk taking, causes departures of the most highly capable employees, and very often removes customer interests from business decisions.

On a large number of occasions, we have been retained out of client survival necessity to mitigate or eliminate this negative force. During 14 of those engagements since 2014 we have occasionally mapped the beginning of bureaucracy, the growth of bureaucracy, the commitment to and defense of bureaucracy, and the impact of expanding bureaucracy upon client brand, revenue, margin, profit and shareholder return prior to neutralizing this cancer in partnership with our clients.

 

THE CASE-

As with the case of colon polyps progressing to colon cancer, the bureaucracy cancer frequently takes as many as 2 to 12 years before it becomes impossible to reverse and heal.  It is a one-way street within both colons and enterprises, and without external intervention both cancers are eventually fatal 100% of the time.  But for 1 to as many as 8 years there tends to be no discernible illness symptoms perceived by most ill people and ill enterprises.

Colon Cancer Stage IV is present whenever that cancer has metastasized from the colon to any other body organs.  Bureaucracy Stage IV exists whenever bureaucracy has spread from its originating department, executive or work team to any other department(s), executive(s) or work team(s).  Our years of research indicate that this bureaucracy cancer spreads noticeably more rapidly within business than colon cancer spreads within the human body, particularly when any new key executive is a fan of such bureaucracy.

Endemic bureaucracy is more damaging to earnings than the most intense market competition is, and we refer to it as Enterprise Stage IV Cancer (ES4C) with clients using pointed words such as affliction, blight, disease, scourge, terror and villain to describe it.

 

CUTTING TO THE CHASE-

Within business, bureaucracy is any action, habit, methodology, leader preference or undertaking that does not translate into improved financial outcomes and/or internal efficiencies beginning in short order.  It includes any and all activities that are not focused upon enterprise mission as it relates to customers and financial results growth.

As one example within enterprises prone to superabundant meetings, a 4-hour meeting should deliver twice the financial and/or efficiency improvements of a 2-hour meeting.  Likewise, a 12-person meeting should deliver 4 times the financial and/or efficiency improvements of a 3-person meeting.  Conversely, a 1-hour meeting that delivers no improved financial and/or efficiency improvement results should have lasted no hours.

When the most capable people are hired, led and rewarded correctly there is very little need for frequent, large or routine meetings or other bureaucratic manifestations in order to coordinate employee and executive actions.  Unnecessary and non-accretive meetings are defined by us as  group grope.

 

THE DNA OF BUREAUCRACY-

Bureaucracy is not born; it grows.  Similar to colon cancer it is not possible to cure ES4C without direct and targeted interventions, some of which are out of necessity as invasive as a flexible sigmoidoscopy is for the purpose of ending colon cancer.  Sometimes polyps must be removed and other times the colon and other organs need to be removed or replaced.

The reason forest fires are so effective at what they do is because they create their own winds with those winds generally being 10 times what ambient winds are before such fires exist.  Enterprise bureaucracy is also fueled largely by its own wind.  Bureaucracy and forest fires create trails of destruction in different locations while each is defined by some individuals as effective.

While we cannot possibly know the level of bureaucracy extant within your enterprise from a great distance if it might exist, it is our hope that it and the fuel that feeds it are non-existent for you, the people around you and the damage that is usually left by it.

 

THE SYMPTOMS OF ES4C BUREAUCRACY-

Listed below are 22 of the 40 easily discernible symptoms of detrimental bureaucracy negatively impacting enterprise outcomes.  When we are called upon to assist new clients in dire bureaucratic straits, many or most of these symptoms are evident.  The more of these symptoms that exist within a given enterprise the greater their combined negative impact on brand, customer and employee opinions, enterprise capabilities and financial results.

  • Inflated position titles when compared with individual position holder accountabilities, capabilities and responsibilities.
  • Reward system structures that are not founded upon market data and compensation best practices.
  • Meetings that occur on a highly repetitive calendar basis such as “The Weekly Tuesday Sales Meeting”.
  • Meeting titles with the word “Staff” included in the meeting title.
  • Meetings that do not end on time and do not become shorter.
  • Meetings that include people who do not talk and perhaps do not listen.
  • Senior executives who are seldom or never present in customer facing locations.
  • Executives and/or employees who do not respond to inbound communications on the date received at least 80% of the time.
  • Individuals without subject expertise challenging individuals with subject expertise.
  • Excess energy spent attempting to solve real or imagined internal issues that do not distill to customers and financial results.
  • Debate and deliberation about opinions and views instead of about evidenced facts.
  • Reserved and named parking spaces.
  • Private, as opposed to shared, executive assistants and secretaries of any number greater than one.
  • Fear of being fired for any reason other than incompetence and/or lack of production.
  • Rewards not differentiated according to individual capabilities and contributions.
  • Administrative, executive and/or middle management headcount growth beyond enterprise revenue growth percentage.
  • Headcount growth within departments and functions insulated from customers and markets such as Administration, Human Resources, Finance, Legal, Information Technology and Marketing.
  • Position titles such as “Chief of Staff” or any similarly rhythmic titles.
  • Lack of autonomy on the part of highly capable employees and executives.
  • Audits beyond those mandated by regulatory agencies.
  • “Dry runs” in advance of meetings and/or presentations.
  • Existence of roadblocks to risk taking.

Please know that the existence of only a very small number…1 to 3…of these bureaucracy symptoms within any enterprise will not create ruinous  bureaucracy until bureaucratic metastasis occurs on what tends to be a naturally expanding basis.  However, when very few or none of the above bureaucracy symptoms exist the enterprise has avoided this malady at least until a senior executive is hired who happens to be a proponent of injurious bureaucracy.

How to avoid that executive hiring outcome will be presented here in a future Proven Solutions article.

Bureaucracy measurably inhibits human and business performance.  And work flow becomes increasingly stagnant within increasingly bureaucratic organizations at the expense of all stakeholders.

This solution is followed by our 03/28/19 bureaucracy solution:
Click Here For That Solution

 

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