Why do large organisations lose their way

Why is it that large organisations, particularly state run, lose their way?

It is largely true that as an organisation grows it reaches a point where the growth is focussed on internal functions. The bigger it gets the more people it has focussed on non core activity and the whole organisation gravitates away from service delivery.

The early stages of a business see almost all employees focussed on customer facing roles. They are all in touch with the customer, know what they want and know how to deliver exceptional service. They react to changes in demand very quickly and innovate extremely well.

Now as the business grows more layers of management appear and we have personell, Accounts, facilities management and a whole raft of people employed in the business that are as far removed from the customer as its possible to be and as this proliferates it becomes the fact the more staff are engaged in internal organisation than are engaged in front line customer facing roles which is where the profist are generated.

Take the UK's public sector as an example. This grew massivley under the labour administration through the late nineties and early 2000. As at 2010 the public sector head count was in the region of 7m employees. Now by definition the public sector exist to serve the public but of the 7m people employed fewer than half of them were engaged in frontline service delivery, actually serving the public.

The remiander we assume were managers of some sort but how we get to the stage where 2.5m frontline workers require 4.5 million support staff is beyond me. But this is how so many large organisations end up.

Departments grow as a result of empire building. A Manager with a large staff must be important right? Must be worth paying a large salary to and so his or her manager must be paid more and so on it goes.

Look at an example of a large financial institution. As it starts up if is very focussed on customer needs and benefits as as a result it is successful and growth is strong. Inevitably the pains of growth start to show and an example of this is that customers experience things they don't like and make complaints.

Now instead of focussing resources on making sure the processes that allowed this poor service to happen are fixed and the poor servcie doesn't happen again, what the organisation does is employ customer service staff to handle the complaint. As this goes on more and more complaint handlers are required and still no one is looking at the process that needs fixing.

A growing business needs strong leadership who keeps the organisation focussed on the customer and their needs. After all its the customer that pays all the overheads. Strong leaders can see that it is often better to outsource non core functions so overheads can be controlled and resources focussed on what matters to the customer. Value.

They are careful when outsourcing customer facing, non core functions such as support and after sales care as these are critical in maintaining relationships and boosting long term customer value.

Don't let your business lose its focus.

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By Steve Wardle - Founder of TheBusinessBuilderClub.com
http://www.TheBusinessBuilderClub.com