The Disappearing Organization

By Dr. Martin M. Lwanga

When Asazze was appointed the Chief Executive officer of Namulonge Clays Ltd one thing he quickly noticed was how big the organization was, which he considered quite no longer feasible. According to him in the 21st century such mammoth organizations were a thing of the past. The new organization was supposed to be skeletal, concentrating on core functions. In the words of one management expert modern organizations were now supposed to be “nimble” having shed off stifling layers.

At the old bank where Asazze had been the organization had long decided to divest herself of non core functions such as transport. When it came to taking anyone anywhere the Bank would simply call upon a service provider to run errands. Previously the Bank had also a list of properties it rented out to staff but these had been sold off and staff were now given a monetary cash equivalent to look for own residence. For security the organization had hired a company that was now taking care of any security concerns.

Asazze came brimming with these ideas and in his first Board meeting he presented a list of the kind of services he wished his new outfit to divest from. “Ladies and gentlemen” he pleaded with the Board, “the only function that we should manage is manufacturing. That is our business. The rest from cleaning to payroll management let us find a service provider for whom this is bread and butter.”

There was a look of incredulity that followed the new CEO presentation. Many came from the old school that the larger the organization the better, even if it meant increased expense. Some could not fathom how functions such as Human Resources and Accounting could be given out for someone else to manage. “Suppose these stranger sell our secrets,” argued a concerned Board member. “I am not for this divesting stuff.”

Reforming organizations

The premise that the larger the organization the better is fast disappearing. What today counts is rather the profitability of the organization or its ability to break even and have a surplus for future investments. If an organization is large possibly for the sake when it cannot break even and is possibly unsustainable such has missed the point. I have been around some organizations where while income kept on increasing so did accompanying expenditure ultimately suffocating any progress. In management big is not better.

What some organizations have sought to do is to divest themselves of those non core expenses and hence lessening their cost. For example, once, one school decided to outsource cafeteria services, which normally are in house services. This not only enabled the school concentrate on providing education services but also saw her utility and payroll bill going down, enabling her to invest the savings in her core education services.

The next time you run into a big organization pause and ask if all that expanded layer is quite necessary. It might be that the organization long left her core mission and is now managing functions way beyond her original objectives.

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