Friday 21 January 2011

Ask not what your company can do for you, ...?

John F Kennedy to me was one of the finest presidents of the US. Shot and killed before I was even born, but still.
During his inaugural address on January 20th 1961, one of his now famous quotes was:
"Ask not what your country can do for you - ask what you can do for your country"
A great quote, in the given context - now let's apply that to companies shall we?

A tweet from ChristianBraukm├╝ller triggered me:
Why do german recruiters located in the north offer projects in the south,while the ones in the south taking care of northern projects? Hmm?
My answer to that?
@ Because they follow their individual profit & loss, not the company's
I've seen it so often in companies: people get dragged around the globe or nation "because they have to make money for the company". Because the Sales people have targets, they get out of their ways to try to reach those. They compete with the competition (good one!) on customers or industries, but also try to make money by extending their sales area across a (regional, national) border or two, or simply lowering the price.

Both of the latter have adverse effects: they damage the margin. Reaching out of the usual comfort-zone territory means increased travel cost: getting there costs more money than usual, and staying there (in a hotel) costs more money than usual.
Lowering the price for work delivered also damages the margin: people doing the work don't cost less than they used to, yet revenue is less, thus so is margin

Yet, Sales make their bookings - and get rewarded more than when they wouldn't do so
The management responsible for the sales make their targets as well this way: their Sales make their target, and their people make revenue. Yes that is equal revenue at increased cost, or less revenue at equal cost, but still - if the incentive is to sell 'm by the pound, they'll get sold by the pound

To make matters worse, Sales have now made their targets - and will get financially rewarded via bonus schemes or whatnot. In Consulting firms, or System Integrators, it's also common to give employees a target on billable hours - which they'll make this way, and also need to be rewarded via bonus schemes or whatnot
Get the picture? Margins go down this way, need to reward increases, causing the margins to become even less

One echelon higher, at the management level, people will be happy however: their Sales made their targets, their people made their targets, so they themselves made their targets

Meanwhile, back at headquarters, the old model is upheld: budget versus realisation, expressed in plain margins. Not much use to crank up revenue if cost outweighs it as a result: you spend more time and energy and get back less money in return.
So, the increased cost has to be undone: travel allowance goes down, hotel allowance goes down, telephone reimbursement goes down, resulting in the average employee having to do more - with less
Will that all even-out? No, maybe a bit or even a lot, but not entirely

So, in the very end, HQ produces a flashy annual report showing nice revenue and profit.In the mean time, employees are increasingly upholding the slowly collapsing structure of the firm's edifice - and paying for it with their own private time

It is fine to do something for your country or company, but when the balance is lost, you better ask when they're going to pay back the favour

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