Complex organizations commonly have core functions and centralized overhead support functions tasked to aid all core functions. Since support functions don’t report to the core functions they are often disconnected. Furthermore, since their budgets are not dependent on the core function managers they often behave as independent entities with priorities unaligned with those of the core function.
Disconnected Support Functions: The Problem
It is typical for a complex organization to have one or more core functions. These are the reason the organization exists. They provide the unique skills and processes that are the organization’s core capabilities. These would be Core A and Core B in the illustration.
Support, or overhead, functions exist for different reasons. The illustration depicts three support functions: X, Y, and Z. These functions all report to the same headquarters as the core functions and have no forum for interaction with core before the implementation of a role based control process.
Support functions are the repositories of specialized capabilities like personnel management or accounting. It is more efficient to have a single facility management overhead organization than it would be for every other organization to hire their own janitor, for example. Furthermore, centralized overhead functions relieve core function managers of significant administrative and technical burdens that would be distractions.
It is understandable that disconnection can easily occur. After all, support functions don’t report to the core function managers. However, it can happen that support functions get so disconnected from their roles that they forget they exist to support the needs of the core functions. I’ve have even seen instances where support functions task the core functions to support their needs!
It is also the case that support is apparently “free” to the organizations core functions. It is not unusual, for example, to see core function managers wanting the latest computer hardware, the newest cell phones, and constantly enhanced management information systems. The demand for “free” goods is infinite. (See the free goods blog)
The result is that overhead functions grow even when core functions are being tightly controlled. Both core and support areas are stressed. Core managers feel overhead functions provide less support than is needed. Support managers feel that core managers don’t understand their problems or contributions.
Role Based Control: A Solution
Role based control uses the same techniques and principals of organization based control. The difference is nature of the after action review. In role based control the AAR creates a forum for interaction that brings support and core management together to discuss cost and performance issues.
In organization based control the subordinates present costs, explain variances to expectation, and outline continuous improvement initiatives to their higher level manager. In role based control the support function managers present costs, explain variances to expectation, and outline continuous improvement initiatives to the core function managers.
The unique requirement of role based control is that each core manager’s share of each support function is not readily captured in the accounting systems. Support functions must be allocated to their consumers: the core functions. (Allocation can be a complex issue and is the subject of numerous blogs in the cost measurement section.)
The illustration shows Support X, Y, and Z allocating their costs to both Core A and Core B. This occurs in the after action review where headquarters management also attends.
Allocating support costs to core managers significantly changes core manager behavior. They can now see, for example, the cost of their technology requests and balance that cost against their other priorities. Support functions now have a forum to bring their issues, problems, and recommendations to key managers.
Both support and core functions are much better connected and mission focused.
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