Why is it many large corporations have problems controlling expense?
We have made it to the point where large corporations valiantly attack payroll by, eliminating jobs. These are largely the bread, and butter jobs responsible for generating income that feeds each employee of the company.
If upper management payroll goes virtually unchecked, the only control on payroll is where revenue is driven. Play down there, and long term, loss of revenue will be realized. Cutting back on those helping customers means less customer service, less customer loyalty, and less revenue.
Cut back on payroll, and you cut down results. Fair equation, and logical conclusion but, not from those running the show. The equation is easy for anyone to do. However, I submit there is an illogical result.
The results expected by the most illogical group in this capitalistic economy is not worthy of the equation. They think they have not been getting their money’s worth at this point. Since that is the basic premise for controlling the easiest expense on the P&L, those remaining on the job will be happy just to have that job.
Most often it’s taken as a given by management. If they throw in a casual jeans dress day it will get it done. Surprising positive results!
Amongst individuals employed under the auspices of this management group, you’ll find it doesn’t really get it done. Their employees are just not as stupid as management might think.
It’s kind of like the anonymous employee inquiry from management where the first thing they have employees do is, log in to a website.
Management is quite often very happy at all the ‘anonymous’ praise received from employees, and send a reply: ‘We had no idea we were doing so well in your ‘anonymous’ opinion.’ They honestly go with that.
We have to hope everybody’s smarter than they appear to be.
We all go back to business as usual telling each other half truths at best. One of those we know, they know, we know, they know etc. scenarios. Bottom line: pretend to show the truth as it seems to appease the other group.
There, that gives you a little background. Those are the two prime groups involved in the scenario.
Okay so, now what? Wasn’t the idea to curb expense? Payroll in particular?
I’m suggesting a completely different business model from the typical, traditional business model.
American business is over populated with CEOs, and assorted personnel at the top. Many paid handsomely but. are not on the front lines literally producing revenue. Some are visionaries for their companies but, very many more have no real vision.
Picture this if you would. I suggest CEOs begin their own external management businesses. They are employed by, their own companies. Their companies would employ an HR Department.
These CEOs would oversee the entire portfolio of companies.
There would be only one Vice-President, and that would be within the structure of the management company with top management payroll paid at the management company level.
The opportunity for even higher pay for CEOs as they govern over several companies rather than just one with the companies paiying a basic fee which is substantially lower than the typical, individual corporate CEO , plus bonuses, and options.
The Director of Operations is the highest level of management within a portfolio contracted company. The external Management company is paid a a management fee, and bonuses but, is far less expensive than each company establishing a management hierarchy of their own beyond a Director. Only the very best CEOs would survive this kind of change.
Where to spend saved dollars from a myriad of top management. Imagine one company managing several companies, and that umbrella employs one HR, Advertising, Payroll & Benefit department for all of them. The CEO works for the umbrella. All major ‘home office’ functions performed by, the umbrella.
Put the dollars back in to the operations expanding payroll positions directly responsible for increasing revenue!
These management companies would take on a balanced portfolio of sectors as it would become counter productive for these companies to be contracted by, like companies.
The management companies could become desirable companies for a publicly traded product based on the portfolios of companies. Another incentive to manage successfully. So not only is stock available as individual companies are now but, management companies could be listed, and their portfolios as yet another investment source.
What factors will it take for these management companies to become a success. Obviously, quality of leadership. How good is the CEO? How motivated to success is the CEO? What else? Non-competitive portfolio, no quantity ridden portfolios among possibly other characteristics but, these are the ones that come to mind.
After going through all of this, I understand this platform already exists in varying degrees with a minimal amount of companies.
What I am advocating is this model becoming the standard. Why all the unproductive payroll at the top? If there’s going to be payroll, let it be productive, revenue producing payroll. Let the management companies assume the payroll at the top.