HQs keep their heads
Sunday 22 August 1999
Once companies proudly erected monuments to their own glory; now they now seem just as proud of how successful they have been in dismantling them.
ABB, the European industrial giant, is often cited as an example of how a huge international concern can survive with just a couple of dozen people at the putative HQ. Less well known is the US steel company, Nucor, which is so shorn of pretension that it was not unknown for the former chief executive to man the switchboard.
And yet for all the years of downsizing in the managerial classes, this perception of the doomed head office may be inaccurate. According to research from the Ashridge Strategic Management Centre: "There is a tendency to see effectiveness in cost terms: headquarters are overheads, and overheads are a bad thing. The reality is more complex."
In a new survey, entitled Effective Headquarters Staff, Ashridge reports that while companies may have been cutting staff in recent years, they do not seem to have been targeting HQs any more than other parts of their organisation. "On average, companies have roughly the same proportion of employees working in their headquarters as they did five years ago."
However, this does not mean organisations are complacent about their HQs. Up to three-quarters of the large UK companies polled for the survey expressed concerns about the effectiveness of areas of their HQs - and such worries extend beyond cost. Most respondents were more preoccupied with corporate strategy and the ability of corporate HQs to support it.
Although the Ashridge report includes a section on benchmarking, the authors steer away from the one-size-suits-all approach. Instead, they contrast how the publishing group, Emap, and the multinational consumer goods company, Unilever, have both been highly successful through taking different approaches.
At Emap, the centre has a very limited staff, and creative teams are left to expand their businesses as rapidly as possible. Unilever has a corporate staff of about 4,000 supporting every aspect of the far-flung operation through co-ordination, sharing of best practice and the like.
The moral is simple. Just as companies should not assume that they need a well-staffed HQ to be taken seriously, so they should not assume that such a presence is useless. It is all about assessing the needs of the company and making sure the HQ meets them, rather than the other way around.
Of course, it just may be that taking this line will end up reducing the numbers and influence of headquarters people.
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