Improvements to Corporate Strategy

¶ … company with which the author of this report is familiar. This report will be divided into several points of analysis including an executive summary, a general analysis of the corporate strategy of the selected firm, the formulation of a corporate strategy, the implementation of a corporate strategy and the conclusions and recommendations that the author of this report feels are appropriate given the company involved and its circumstances.

For the sake of privacy and trust, the author of this report will not mention the company in question by name. However, the author will say it is in the broader financial services sector and it does very well in the industry within which it operations. Even so, there are some things that the company has struggled with here and there including the management of employee workloads, overtime management, staffing management in general and the ways in which it does (and does not) contain costs. While the company is doing quite well the way they are but they could be even better.

Executive Summary

As noted in the introduction, the precise company will not be identified as there are some trust and privacy concerns involved. Even so, the author of this report shall be very specific about the company's corporate strategy and what could be done to improve and perfect that strategy. Indeed, there will also be an explanation of how to implement that strategy. The general corporate strategy of the firm in question is to keep costs low and value to the client as high as possible while doing so. Expenses are very carefully managed with the firm and this will be explained in more detail in the next section. There is a major focus on the value proposition between the company in question and their clients. The company caters to corporations and businesses rather than individuals. The businesses in question are of all sizes ranging from "mom and pop" establishments to large (if not very large) businesses. Many of the businesses this company serves are most certainly ones that some people have heard of. Most extremely large businesses handle the service in question on their own but the service in question is one that is heavily outsourced and the company in question is the biggest one as it relates to the service that they render. The company's rationale for its strategy is to deliver a high level of service to its employees and keeping a proper value proposition while at the same time keeping costs low and delivering shareholder value. The financial performance of the company has been extremely consistent and the company has never been in any sort of financial trouble. The "belt-tighten" when necessary but they never go overboard with their spending or expense levels. If anything, they spend a bit too little and this relates mostly to managing workloads and technology upgrades. There are indeed inefficiencies that can and should be dealt with and sometimes they are not. Additionally, there are problems with being too conservative on spending and decisions are sometimes made in an arbitrary fashion. The company's heart is in the right place but they need to be a little more precise and focused on what they do.

General Analysis of Corporate Strategy

The people that run the company in question are well aware that their general margins in terms of operating income and gross profit are not sky-high but they are not bad either. The industry in question is very much based on loyalty. Finding new business is the hardest part of the industry and thus it is a major priority to keep a client once they sign on. Indeed, the retention rates from year to year are usually about ninety percent. Even with the client focus, the other pillar of the way they do business is to keep costs as low as possible. For example, the company makes heavy use of home-based employees that work remotely. This is even true in cities and areas where they have a physical office. For example, the company had a location in a major metropolitan area. The company intentionally moved to a smaller location that was not large enough for the employee headcount they had at the prior location. They adjusted to this by having the excess employees work from home.

In many to most cases, unless a person is an executive or physically required on-site, the job is subject to be done by someone who works form home provided that they can be productive and such when they do so. After all, not all employees have the discipline and maturity to work from home. Another example would be how the company handles supplies and equipment. It used to be that many representatives in the office would have their own personal printer on their desk. That has shifted to a printer for every aisle or two. Homebased employees must order all of their supplies (e.g. paper, toner, etc.) through the corporate vendor. That corporate vendor actually partners with a major office supply chain but, as one might expect, the company gets a discount and thus they want all business to be channeled through the corporate ordering system so as to keep overall supply costs lower. Travel for work is usually extremely limited unless the job is requires it. This is mostly limited to executives and salespeople.

Finally, there is the management of headcount and overtime. The company is very stingy when it comes to allowing overtime and/or additional headcount. In some cases, they are entirely too restrictive and conservative. One major service realm that the company focuses on is compliance and it can handcuff hourly employees if they are not given the proper amount of time to do their job. As noted earlier in the report, the company's decisions about overtime are usually quite arbitrary and wide-ranging and they do not always account for the particular situations in each department. In some departments, it is to the extent that work is having to be pushed out because not enough time is allocated for the current flow of work and this even happens as the peak times of the year. The general logic, even with those deficiencies, is that there is little room for error in the industry and thus cost containment is an integral and major part of keeping margins good. It remains to be seen if this hard line will cause a dip in retention and/or customer satisfaction.

Formulation of Corporate Strategy

The overall corporate strategy of the company in question is actually pretty solid. Keeping costs low even during strong economic times is a good habit to be in and it will help inoculate the company against slowdowns that occur when economic times are indeed tough. However, while the overall ideas they are using to enforce the same are fine, the way in which these strategies are sometimes implemented is not the best. There is indeed internal consistency in how the policies and decisions are enforced but there are departments and situations that call for an alternate or at least slightly different approach and this does not always happen when it could or should. Even if costs are being held in check, it is going to be at the expense of work getting done timely and this will eventually be a drain on survey scores and retention. As noted before, the priorities are fine but the way they are put into motion is too monolithic. Some might say this is not a problem but some departments are going to have excess headcount and/or man hours while other departments will have too little. There needs to be an enhancement of the currently existing strategy that allows for the shifting of resources, overtime and headcount when the situation calls for it. Sometimes, this will mean letting people go or shifting people to other departments. Other times, new heads might be needed or perhaps it can be done using temps that can be dismissed when the need goes away.

There is cooperation and compliance between the executives and leaders giving the edicts, but perhaps that is mostly because no one wants to be singled out for being a complainer and/or be fired or punished for being insubordinate or ungrateful to have a job. However, there has been some negative feedback directed at what is going on and it does not seem to resonate or be listened to by the people that hold the purse strings and that make the decisions. To be sure, employees that complain are not always mindful of the details and/or they are actually part of a problem. It could be that they are not doing their job as correctly or efficiently as they should be. Other times, however, the front-line employees know precisely what is going on and the management either does not know these details or does not care to know them. To put things concisely, the company in question is keeping costs down but they are doing it too excessively and without paying attention to the minutia that the reporting managers should be sending back up the chain. If they are and the top management is ignoring it, they should not be. If the middle managers are not giving the proper feedback, they need to. If the proper dialog is not established, retention and surveys will start to suffer. Respecting the chain of command and deference to authority is one thing but lack of due diligence and/or complete reporting on what is really going on is quite another and the latter can greatly sap the performance and progress of a company. The principles are there but the practice is not, to say the least ... at least not at all times.

Implementation of Corporate Strategy

When it comes to the implementation of corporate strategy, what is really going on is that there is an imbalance between the two major prongs of the company's stated strategy. As noted before, those are keeping costs and headcount "lean and mean" while at the same time delivering on the value proposition that clients have come to expect. If the departments on the front line are not getting the headcount (or at least the overtime) necessary to get the job done, there will eventually be blowback from the clients. They will assert that they are not getting what they pay for and they will demand a different outcome or they will start looking elsewhere. As far as whether there are enough people and resources in place to "make this happen," the answer is a mixed bag. The leadership is overly focused on keeping costs down. The structure of the company is just fine, for the most part. The structure is not why problems exist. The resources are there and they are ready to be used. However, employees are being handcuffed in terms of being able to do their job by overtime/headcount rules that are not always in alignment with reality. Much the same thing can be said about the systems. The company was a little too conservative when it came to upgrading software and hardware technology but they have most certainly made some strong strides in the last few years.

As far as the culture, there is some obvious discord between the stated values and the underlying values. As noted before, the two main values of the company are efficiency/value to shareholders and value to the client. The excess focus on the former and not the latter leads many to hold that the company is obsessed with bleeding out every last bit of productivity from the employees even if there is stress and service deficiencies involved. As for whether the company has the resources to actually fully align with its corporate strategy, the answer to this is a resounding "yes." The only question is whether the leadership is willing and able to actually follow through with that and whether they see a problem. At this point in the game, that answer is unclear but evidence seems to suggest they are concerned with keeping costs down at all costs even if there are some rough waves here and there. It remains to be seen how much collateral damage they are willing to absorb before they relent and loosen up spending on manpower.

The author of this report would single out culture for a moment. As just noted, there is a very strong focus on keeping overtime and other costs low and this condition and practice is extremely noticeable to the rank and file. Further, this fact is actually a major point of concern and complaint when it comes to employees. They rarely if ever say so on the record and usually just say it amongst each other. However, when there are clients going unserved (or not being served as quickly as they should be), that is a problem. When there are enforced deadlines on when something should be done, this makes it even worse. If there is indeed a breakdown in terms of how things are being done and things can be done quicker, that is all well and good and should be addressed through training and documentation of best practices. However, putting employees in a lose/lose situation is less than a good idea and for a number of reasons. First, the work that is completed will tend to be completed in a sloppy manner due to being rushed. Second, employees will be held to account for not getting their work done when they are not being given enough time to get the job done and that is not fair ... and they will know it. Lastly, there may be the propensity of some people to "work off the clock" and that can get both the employee and the company into a whole lot of trouble due to unpaid wages. The company has to be reasonable and fair about the matter. Either they need to lengthen the acceptable turnaround time (which will probably impact client satisfaction) or they need to provide the overtime or headcount needed to alleviate the problems that exist. If that is not done, employee satisfaction, turnover and such will all spike and that will just make a bad situation worse.