Nonlinear Enterprise - Latest Comments in Killing the enterprise by decree

Re: Killing the enterprise by decree

César — Thu, 10 Jul 2008 23:22:22 -0000

I totally agree Jason. Every time this action is taken in the industry (and we're still talking mainly about our observation of Investment Banking IT, I guess) it has a negative effect for that reason. I share your view that the ones who leave end up getting more elsewhere. Even when the ones who replace them appear to cost less, they are disproportionately less productive so the value for your money drops significantly. If you are lucky they eventually grow into the job - just in time for the cycle to complete and another sweeping 10% cut...

Smoke and mirrors should be outlawed both as as management methodology and as an accounting practice. I wonder if senior management or the executive board or whoever comes up with these decisions are blissfully unaware that the net effect of this short term accounting fix is in fact to hurt the company.

Re: Killing the enterprise by decree

César — Thu, 10 Jul 2008 23:15:01 -0000

Thanks for offering the contractors' point of view Neil. That is another very good example. The bigger the company, the more tempting it must be to use this bullying tactic which says "we're big and you're small and there's nothing you can do about it".

There might be a number of underlying assumptions at work, such as:
- A 10% cut is too small to trigger a mass departure.
- The change will be perceived as industry-wide because everyone is hit at once.
- By making it indiscriminate contractors and managers won't feel targeted.
- A 10% cut is better than losing one's job, in other words: "misery loves company".
- Middle managers will welcome not having to deal with conflict resolution because they are encouraged to legitimately claim it's out of their control.
- Those managers couldn't be trusted to make the necessary cuts anyway because they are consumed by empire-building.

The total lack of respect implied by this action is also pretty insulting as a manager, so I suspect those who stay are the ones who would welcome having no participation in such decisions.

Re: Killing the enterprise by decree

Jason — Thu, 10 Jul 2008 18:07:11 -0000

I lived through that too. It seemed faintly amusing at the time. There were these guys who had been around for years, happy in what they were doing. They knew the company procedures back to front, took very little effort to manage, and had no idea how far they had fallen behind rate-wise over the previous few (millennium bug & internet bubble) years. So off they all went - to better paid jobs. And they had to be replaced with much more expensive people, whey knew so much less.

Whilst we may giggle at stupid bureaucracy, it was a worrying feeling that if the company was doing this in the UK for no real justifiable reason at the time, how many of the other senior decisions were being similarly misapplied. I was glad I did not have a bonus for it to affect.

Re: Killing the enterprise by decree

Neil — Thu, 10 Jul 2008 17:11:01 -0000

The attraction of the "one size fits all" policy is that it is administratively simple - it can therefore be sold to the decision makers as efficient whereas the truth is that it simply masks the lack of good managerial skills available within organizations.

To illustrate, another example from the contracting world (investment banking clients) where the current flavor of the day is for organizations to issue a take it or leave it 10% across the board rate cut. Inevitably this leads to the retention of the less skilled, motivated and mobile resources who will simply accept the policy - result being a lower overall skills base to draw on at the time when a more flexible and agile pool is required.

Still, at least management did not have to make any real decisions ... except which limb to aim for this time ...