Article published in the Philadelphia Business Journal on May 27, 2024.
How business units and corporate staff units within an organization interact with each other significantly impacts the success of every company. I have personally experienced these interactions, having worked as both a corporate staff unit manager and a business unit manager as I rose through the ranks of my company. I wrote on this subject in June 2019 and in December 2023. This column builds on each of those previous columns.
Business units deliver products and services to customers and clients, generating the revenue of the company. Their mission is to provide a great customer/client experience to the marketplace, so people buy from them rather than from their competition. They are constantly focused on increasing their competitiveness to become the preferred provider to their marketplace.
Corporate staff units provide expert support to other staff units and to the business units. These units include finance, audit, compliance, legal and human resources. Staff units ensure that there is consistency across business units and that regulatory requirements are met.
Business units are the internal customers of corporate staff units. Staff units should be doing everything they can to be responsive to the needs of the business units they serve in order to help them meet their goals. Business units and staff units must partner and collaborate to achieve success of the business units and the company.
A frequent complaint of business unit managers is that staff department bureaucracy impedes their ability to get things done due to unnecessary policies and procedures that take time and discretion away from running their business.
After Bill Anderson became the CEO of Bayer AG, the maker of Bayer aspirin and other pharmaceuticals, he announced plans to cut his company’s bureaucracy.
As reported in an April 10 article in Business Insider, Anderson stated, “We hire highly educated, trained people, and then we put them in these environments with rules and procedures and eight layers of hierarchy. Then we wonder why big companies are so lame most of the time.”
In a video to his employees, Anderson said, “At Bayer, we have 1,362 pages of centralized internal regulations that are promulgated to the whole company, That’s actually longer than ‘War and Peace.’ We will be cutting those rules by about 99%.” I doubt if Anderson’s goal of a 99% reduction of regulations can be achieved, but he is moving in the right direction.
Policies and procedures that are not related to legal/compliance requirements or good management practices can get out of hand. They strip the business unit managers’ ability to effectively run their businesses. These policies need to be periodically reviewed and sunsetted if they serve no useful purpose.
Another complaint is that higher priorities of a corporate staff unit impede the timely support of a mission critical initiative of a business unit, and the mission of the corporate staff unit is not to focus on the business unit, but on the company as a whole.
So, how should these issues be addressed?
If you are the manager of a business unit, you are held accountable for achieving your strategic objectives and your business unit’s bottom line goals. If you can’t get what you need from a corporate staff unit, you need to have a conversation with the leader of that staff unit. If that doesn’t work, take the issue to your boss and, eventually and if necessary, to the CEO of the company.
I would not be bashful in taking this issue up the organization for resolution. Just do it in a politically sensitive way. Your goals are one element of the CEO’s goals, and the CEO is evaluated by the board on the results of the entire company. The CEO will want to help you get what you need to achieve your goals.
What’s the criterion to decide whether to centralize or decentralize a staff unit? If the service, whether provided by employees or outside contractors, is mission critical to the success of the business unit by being part of that unit, that service should report directly to the business unit. Otherwise, the service should be centralized.
Don’t let your company’s bureaucracy stand in the way of success. Do what has to be done to meet the needs of your business unit. Sometimes it’s better to ask for forgiveness rather than permission.
Stan Silverman is founder of Silverman Leadership and author of “Be Different! The Key to Business and Career Success.” He is also a speaker, advisor and widely read columnist on leadership. He can be reached at stan@silvermanleadership.com.
