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Tuesday, 31 March 2009

Big is beautiful is bust .....

The whole concept of "Big is Beautiful" or "Big is Cost Effective" is well and truly bust in my book. Look about you, the banks that have collapsed and had to be bailed out are almost all "Mega" Banks that have swallowed up smaller fry at an astonishing rate. When they couldn't swallow anyone smaller they went after "sub-prime" investments like the money supply was endless. And the management read the bottom line and saw that it was good, while those in the middle saw that things were going adrift and couldn't tell anyone above them. And those at the bottom? Well, why should they worry, as long as they got the salary at the end of the month.

Big does have some advantages, like the ability to shout louder or attract more notice than anyone else. It also allows you to bully your way into the position you want to occupy, but it isn't necessarily the best way to actually run a business. For one thing the "Management" and the "Board" seldom actually know what is happening on the "shop floor". They certainly think they do, but that is because they hear what they want to hear and the troops on the floor tell them what they believe the bosses want to be told and what they hope will get them noticed and promoted - or at least leave them in a protected position. The biggest disadvantage of "Big" is that it takes a long time for any faultlines to become apparent and for any message identifying failure to actually reach the top or anyone in fact that can actually deal with it. The Management seldom have any contact with the coalface and so are unable to identify things that are not going as they believe them to be.

The banks make a good example, the customer service end has become a "sales" service with the "customer support", until recently, trying hard to get you to borrow money or to sell you "services" which perhaps you would have been well advised to do without. Mortgage lending at 125% of value and on repayment calculations based on 4.5 times salary (Sometimes on a combined salary) may sound attractive to someone struggling to get on the property ladder, but is it good business risk? Probably not. The inability to communicate freely and quickly is strangled as soon as any organisation grows to a point in which the top management has no contact with the guy on the shopfloor. This can be demonstrated in any large organisation and both the Fire and Rescue Service and the Ambulance Service can demonstrate this. While the services were small (Say 500 employees) and run by uniformed Chiefs who knew their people and could identify a person in their service on the ground, the bottom rung felt that they could make themselves heard when they had a good idea or saw something going wrong. As the organisation around the Chief grows beyond a certain point the isolation begins to bite in both directions and more than just communication suffers, trust is also lost.

Big rarely produces the "savings" its supporters so often trumpet, the amalgamation of three Fire and Rescue Services into a single one in Wales ended up costing more than twice what it had cost to run the three independently, but this is, of course, concealed as it isn't in the public interest to allow it to be known. Again, the loss of direct communication has had its affect, but a more serious problem is that if there is a part of the organisation which is underperforming or failing to perform at all, it can be concealed by the sheer scale of the problem of trying to communicate. Once the organisation goes beyond a certain size it begins to attract passengers - people sidelined into posts and forgotten. But the astute in these positions can often take advantage and there are any number of examples of such people - who may have been sidelined for disciplinary reasons originally - using the opportunity to reinvent themselves and play the politics to advantage, emerging again in positions of power and on promotion well beyond their actual experience or ability. "Big" frequently actually encourages this. After all, the "management" only know what they are told and what they want to hear, with no contact below the "managers" below them, they have no counter checks they can run.

Look around you at the worst performing organisations in this present crisis and you soon notice that they are almost all "mega" corporations whose management have little contact with the customer other than through "marketing" reports. Look at the state of the Civil Service and you discover that there is a chasm between the Whitehall "management" and those who actually struggle to deliver the service they thought they were employed to deliver. The Civil Service subscribes to the vision that anyone with a "management" qualification can "manage" any function, no matter how technical, without any knowledge of what is being done or how it is done. This simply compounds the "big is beautiful" failures as communication becomes next to impossible between top, middle and bottom of the organisation and its branches. And the wastage of taxpayer money, the failure of projects and the frustration of the lower tier civil servants that manifests in sickleave, stress and absenteeism should tell you all you need to know.

I can identify no "large" organisation where the communication between top and bottom is filter free. I cannot identify a single mega corporation or organisation in which "savings" offset the wastage occassioned by communication failures, duplication of work or sheer wastage due to overly bureaucratic procedures. Big ain't beautiful and it certainly isn't efficient. In my view, big is bust.

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