How To Avoid “the Power” from Strangling Your Company?

Dec 13, 2011 11:23 PM  By

Webster’s dictionary defines power as the ability to do or act; capability of doing or accomplishing something. That definition doesn’t sound too bad, right? After all you want your team to accomplish something. But wait, is that accomplishment for the good of the company, does it meet the company goals or does if fulfill only the mission of an isolated department?

Over the years I have visited with many companies that have segments or departments with “the power”.

The power exists in any department that changes the behavior of other departments to get its mission accomplished. “The power” in companies that can have detrimental effects are IT, human resources, and sales to name the biggest culprits.

Or many times it could be corporate, home office, versus the distribution center. Some people would define this “power” as politics. I will agree that where the power exists, there is definite politics at play, but “power” is a more instrumental ability to affect change that often isn’t necessarily a good change holistically for the company.

IT departments and managers usually are “the Power” when executives within the company don’t understand infrastructure or software and feel they must listen to the IT department. Great companies and even good companies have IT managers that understand IT to be a “service department” and it must perform so others in the company can do their jobs more efficient and effectively.

When “the Power” is in IT, a specific software package may be selected not because it is the best functional fit for the company but because it is the technical preference of the IT executive and often times may cost the company millions of dollars more or cause increased inefficiencies, therefore, requiring more overhead. It is not until the other executives have already invested millions of dollars into a project that they realize “oops we selected the wrong solution and it is affecting customer service, productivity, company mission or a multitude of other areas.”

Literally, this scenario can help put the final nail in the coffin of a struggling company in this economy.

Sometimes the power is human resources. Haven’t you always wondered why companies make acquisitions of good companies then they let go of the most strategic assets which are the people with all the domain knowledge within the company? Companies that view their people as replaceable minions will always struggle.

Another example of HR Power is the HR department that feels you should be “fair and equal” to all employees. This is the right motto but sometimes it can be taken to extremes when it comes to productivity. Watch out because this is a company that is destined for mediocrity.

Why? Let me give you an example.

A company manually stacks cases onto a pallet, and has eight case loaders per shift. Not an easy job and labor intensive. One guy can do 350 cases per hour, he’s working hard and cares about his job. Another only does 100 cases an hour — the minimum standard. HR comes out and says that all loaders should be the same pay no matter the difference in performance. A week later the 350 cases per hour person has left and gone to a company that appreciates his extra effort. The same policy was started in all departments: same pay no matter the effort or productivity. Then the facility becomes a facility of C- people and throughput is reduced dramatically. What happened to equal pay for equal work?

When the power is in the sales department, you find people in supply and distribution shaking their heads a lot. For instance, when the sales department agrees to do a lot of value added services at no extra charge. That’s when a consultant looks at the total cost of shipping to that customer and says, ‘fire the customer, they’re not profitable.”

Perfect examples: A direct-to-consumer company sales department decides to give a free gift with the purchase of an item with no extra shipping cost. It so happens that the free gift was long and narrow and raised the cost of shipping and packing to a degree where the extra orders received because of the free gift were not profitable. Or a company that ships full pallet has a policy of no minimum orders and you end up shipping less than 10 pallets out on a full truckload. This is what happens when departments work in silos. Those silos are not looking at the big picture and the impact to the rest of the company.a

How do you avoid “the Power” from strangling your company?

Invite an executive from every department into a executive group and don’t leave out any departments that are so instrumental to your success like supply chain. Make sure those meetings are open and everyone gets a voice. Avoid the dominate personality from controlling the meetings. Do something simple like soliciting three ups and three downs every Friday from your team and write them on 3 x 5 cards. This really helps you uncover the negatives in a simple, non-confrontational way.

Susan Rider (susanrider@msn.com) is president of Upton, KY-based operations consultancy Rider & Associates.