Winds of Change Buffet Central Staffs
In his so-called "Doom Speech," ABB Asea Brown Boveri CEO Percy Barnevik predicts that two-thirds of big European businesses will fail in the wake of European economic integration—unless they take Draconian steps to streamline their operations. He prescribes strong medicine for firms in North America as well as Europe, beginning with the emasculation of central staffs.
Any corporate center, Barnevik insists, can be reduced by 90 percent in one year. Thirty percent of staffers, including, for example, all human-resource professionals, should be assigned to subordinate business units. (Barnevik has just one headquarters HR professional in his $29-billion firm.) Another 30 percent join independent service centers; these groups must pay their way by selling services to the company's business units. (Those operating units may shop elsewhere for the services.) Yet another 30 percent exit the payroll via attrition or layoffs. Ten percent stay at the center. By year three or four, Barnevik adds, the 30 percent sent to business units can be reduced by one-third; the 30 percent in the service centers can be cut in half; and the group at HQ can be halved as well. Altogether, it amounts to a 60 percent reduction in head count and a 95 percent headquarters reduction.
None of this is fantasy. When Barnevik took over at Sweden's Asea in the early '80s, he cut a 2,000-person HQ staff to 200—in 100 days. (Central staff members were given that long to land jobs in subordinate business units.) Ditto, when Asea and Brown Boveri merged in 1987; Barnevik quickly slashed a 4,000-person combined HQ to 100. More proof needed? At his Finnish arm, ABB Stromberg, an 880-person central contingent was "right sized" to 25.
All of which bodes poorly for central staffers everywhere—unless they get the message quickly. Consider six emerging models for staff realignment, and how you might fit in.
1. Consultative Model I. In this least radical case, staff members more or less stay put for now. But they dramatically change their role—from cop to project creator and network builder. Their sole mission is to help business units do a better job. One could argue that this has always been staffs' objective, but it's hardly been normal practice. (Staffers who quickly cotton to the "servant-of-the-business-unit" role will have a much better time of it if a Barnevik enters their lives and insists that they quickly find a job "down below.")
2. Consultative Model II. In this instance, the corporation reconceives its pared-down staff functions as small "community colleges," as I call them. Remaining staffers become gypsy teachers—almost always on the road, helping business units to develop expertise and to learn from one another.
3. Pure expert. Even if staffs are decimated, there's still a role for a handful of pure "functional" experts with towering competence and international reputation. (I put "functional" in quotes, because they would no longer be members of recognizable, central functional groups.) For would-be "experts," this means developing an independent power base beyond the corporation, then "selling" your expertise (as, say, a logistician) back to the corporation. It takes nerve to imagine yourself in such a role—but if you buy Barnevik's math, there's not much to lose by trying.
4. Staff service center. Recall Barnevik's formula. The bottom line is "marketizing" much of today's central staff activity—insisting that largely independent service centers at least break even by charging for all services rendered to local units. Those units, as at ABB, would in turn have the option of shopping around and rejecting the centers' pitches.
5. Business-development unit. In this model, the expert functional staff turns most of its attention to building its own for-profit business, with at least half its sales outside the corporation. Electronic Data Systems calls such units "horizontal strategic business units"; they proffer expertise in a major discipline such as artificial intelligence—in contrast to traditional, "vertical" SBUs serving, say, the insurance industry. Staff experts work to create new businesses, just as in "normal" line operations. Such horizontal SBUs set strategy, do their own research and development, and are in every way businesses. Many firms are finding that expert-staff skills—e.g., environmental consulting expertise at DuPont—can become the basis of big, profitable enterprises.
6. Get out while the gettin' is good. Forget the machinations described above. Pursue job opportunities within an SBU now. My point: Develop contacts, help out, build a reputation with line operatives for delivering on discrete, value-added projects—before the "option" is presented to you. Not only will you up the odds of landing on your feet in the event of job cuts, but you'll also greatly increase the chances of a warm welcome by the unit with which you eventually affiliate.
The handwriting is on the wall. Behaving proactively is the only sane strategy for any central staffer. Don't say you haven't been warned!
(C) 1991 TPG Communications.
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