The Economist: Businesses must fight a relentless battle against bureaucracy
Schumpeter – Decluttering the company
PETER DRUCKER once observed that, “Much of what we call management consists of making it difficult for people to work.” Nine years after the management guru’s death, his remark is truer than ever: employees often have to negotiate a mass of clutter—from bulging inboxes to endless meetings and long lists of objectives to box-tick—before they can focus on their real work. For the past 50 years manufacturers have battled successfully to streamline their factory floors and make them “lean”. Today, businesses of all types need to do the same in their offices.
The most debilitating form of clutter is organisational complexity. The Boston Consulting Group (BCG) has been tracking this for a representative sample of companies in the United States and Europe since 1955 (when the Fortune 500 list was created). BCG defines complexity broadly to include everything from tiers of management to the numbers of co-ordinating bodies and corporate objectives. It reckons that, overall, the complexity of organisations has increased sixfold since then. There has been an explosion of “performance imperatives”: in 1955 firms typically embraced between four and seven of them; today, as they strain themselves to be kind to the environment, respectful of diversity, decent to their suppliers and the like, it is 25-40.
A second form of clutter is meetings. Bain & Company, another consulting firm, studied a sample of big firms, finding that their managers spent 15% of their time in meetings, a share that has risen every year since 2008. Many of these meetings have no clear purpose. The higher up you go, the worse it is. Senior executives spend two full days a week in meetings with three or more colleagues. In 22% of these meetings the participants sent three or more e-mails for every half an hour they spent sitting in the room.
These e-mails constitute the third form of clutter. Bain estimates that the number of external communications that managers receive has increased from about 1,000 a year in 1970 to around 30,000 today. Every message imposes a “time tax” on the people at either end of it; and these taxes can spiral out of control unless they are managed.
Some clutter is inevitable. The point of companies is to get people to achieve collectively what they cannot do individually, so some meetings and memos will be needed to co-ordinate them. Complexity may often be the price of success: companies that have grown to great size and operate in many markets face far more complicated problems than smaller ones operating on home turf. But Drucker was surely right that co-ordination has a tendency to degenerate into clutter. Meetings multiply. Managers build empires. And clutter feeds on itself. Bain calculates that adding a new mid-level manager creates enough work for half an assistant. Adding a new senior vice-president creates enough work for one and a half assistants.
Clutter is taking a toll on both morale and productivity. Teresa Amabile of Harvard Business School studied the daily routines of more than 230 people who work on projects that require creativity. As might have been expected, she found that their ability to think creatively fell markedly if their working days were punctuated with meetings. They did far better if left to focus on their projects without interruption for a large chunk of the day, and had to collaborate with no more than one colleague.
One solution to clutter is a periodic spring-cleaning to sweep it out. Big companies need to have campaigns against internal complexity: Jeffrey Immelt, General Electric’s boss, is seeking to introduce a “culture of simplification”, as part of a plan to cut the giant conglomerate’s overheads from a peak of 18.5% of revenues in 2011 to 12% in 2016. Joe Kaeser, his counterpart at GE’s archrival, Siemens, is abolishing a whole management tier and reducing the number of divisions below it. When Ford’s previous boss, Alan Mulally, took over in 2006, he called for an audit of all its meetings. He replaced “meetings week”—five days each month in which executives held non-stop gatherings—with one tightly scheduled weekly meeting at which managers are under orders to cut the crap. Mr Mulally’s successor, Mark Fields, had to prove himself first by chairing those meetings efficiently.
Spring-cleaning needs to be reinforced by policies to stop clutter accumulating in the first place. Though it may seem obvious, Intel, a chipmaker, felt the need to impose a rule saying: no meetings without a clear purpose. Lenovo, a Chinese computer-maker, lets its staff halt meetings that are going off-track, in the same way as Toyota, a Japanese carmaker, gives production workers the power to stop assembly lines when they spot problems. Bain says a manufacturer it studied made savings equivalent to cutting 200 jobs by halving the default length of meetings to 30 minutes and limiting to seven the number of people who could attend.
Some employers are seeking ways to let staff at least manage the clutter, if not reduce it. Intuit and Atlassian, two software firms, offer workers a regular quota of clutter-free time. Volkswagen has spared its German staff from having to read work e-mails after hours—and even BCG has introduced rules on when its consultants are entitled to go “offline” in the evenings.
Wasting time, wasting money
The best way to institutionalise decluttering is to force managers to justify any bureaucracy they introduce. Seagate Technology, a data-storage company, and Boeing, an aircraft-maker, both hold their executives accountable for the “organisational load” that they impose on their subordinates in terms of meetings, memos and initiatives, and measure them against their peers. As Bain points out, the most valuable resource that many companies have is the time of their employees. And yet they are typically far less professional about managing that time than they are at managing their financial assets.