Introduction
Although most corporations are aware of the need to trim their workforces, political expediencies and inflexible executives lead to much procrastination as top management strive to guard their positions to the detriment of the firm. The inflated personnel leads to unnecessary bureaucracy and inefficiencies thus termed as bloated management structures, which inevitably lead to poor returns and market decline.
Disadvantages of a Bloated Management Structure
The efficiency of organizations is invariably linked to the type of management structure they employ. Bloated management systems that contain many interlocking hierarchical layers of administration often lead to poor communication, numerous managers, poor client service, lack of creativity, and general lack of coordination (ehow.com).
At Cisco a Silicon Valley firm, restructuring resulted in the company dismissing 550 of its bloated workforce after registering poor results, including a 20 percent share drop within three quarters as further poor results loomed (Finkle). In the UK, premier broadcaster BBC finally has decided to trim its overly bloated workforce that has nearly 2,000 managerial positions and 4,500 job titles plus 191 positions reserved for “advisors” (Revoir).
During the 1990s, the Royal Dutch/Shell Group of Companies (Shell), a joint British/Dutch conglomerate faced threats from newly created nationalized firms. This was due to the firm’s dependence on a decentralized management structure that had a committee of managing directors from both countries running the over 250 subsidiaries thus creating an unsustainable bloated administrative structure.
To enhance efficiency, the corporation eliminated over 1,000 management positions and sold off its administrative offices in London. Nevertheless, the firm retained a bloated workforce compared to the other oil majors who had leaner management structures (Grant).
Shortcomings of Staff Lay-offs
However, organizations should guard against senseless job cuts as fewer workers might lead to poorer client service, compromised quality and output. At 3M, the extensive staff dismissals and introduction of Six Sigma program led to disquiet, and despite greater production efficiency, the firm was lagging in creativity (Hindo).
Companies laying emphasis on crosscutting management techniques inexorably muting the inventiveness inherit within individuals. Nonetheless, shareholders are more interested in the “bottom line” as enhanced efficiency and reduced wage bills increase the revenue base.
Incompetence can still be apparent within all sectors as depicted by IBM, which despite infusing many funds to research had minimal gains. The bloated workforce at IBM led to wastefulness and a then US record $5.6bn loss. The company responded by cutting 42,900 jobs in 1992 and 25,000 the following year. At Microsoft, the company decided to reduce its mid-management positions deemed as superfluous in the wake of much reported inefficiencies.
These positions ranged from the over 200 vice presidents to numerous general managers who expended endless hours in fruitless meetings with insignificant contribution on the productivity of the corporation (Rosoff). Thus several of the inherent ineptitude within organizations stem from having bloated management structures rather than from frontline staff that may be poorly organized and weighed down by bureaucratic systems (Rhiannon).
Conclusion
A bloated management structure should be reorganized to enhance an organization’s competence and endurance. However, the “Slash and Burn” techniques employed by some executives though apt to fetch immense quick-fix results; nevertheless result in longer-term setbacks. There is therefore a need to employ a more rational program that encompasses trimming of unproductive executives whilst still maintaining core staff that guarantees continuity and sustained output.
Works Cited
ehow.com. Implications of a Bad Organizational Structure. 2011. Web.
Finkle, Jim. Analysis: Cisco Needs More Than a Quick Fix. 2011. Web.
Grant, Robert M. “Organizational Restructuring within the Royal Dutch/Shell Group.” 2004. Print.
Hindo, Brian. At 3M, A Struggle Between Efficiency And Creativity. 2007. Web.
Revoir, Paul. Anyone for Decision Support? BBC has 4,500 job titles… and 2,000 of them are managers! 2011. Web.
Rhiannon, Lee. Boston rail report shows need for more frontline staff. 2008. Web.
Rosoff, Matt. So Microsoft Is Cutting Its Bloated Middle Management? Great! 2011. Web.