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Reducing Organizational Costs
By: Dr. Fred Childs
The fundamental purpose for organization is to coordinate a system of talents, resources, and operating structure toward the purpose of attaining a shared corporate vision.
It must be understood that in the pursuit of a vision an organization can be either a benefit or a detriment. In its purest form organization is merely a tool to achieve a specified purpose. Since it is merely a tool the organization can be changed or modified at any time. If it is achieving its purpose then simply improve it as needed along the journey. If it is hindering the purpose one must always remember that as a tool it can be modified or redesigned at any time in order to fulfill its essential role in vision attainment. Simply stated, organization can be a blessing or a curse, an enabler or a hindrance.
One of the stark contrasts between God and man is that God always organizes by creating organisms, and man organizes to create organizations. Since an organization is a tool and is organized by man it can never be allowed to take on the form of a holy thing.
The perfect Biblical illustration occurs when the children of Israel were being plagued and bitten by fiery serpents and dying. Numbers 21:7-9 says:
7 Therefore the people came to Moses, and said, "We have sinned, for we have spoken against the LORD and against you; pray to the LORD that He take away the serpents from us." So Moses prayed for the people. 8 Then the LORD said to Moses, "Make a fiery serpent, and set it on a pole; and it shall be that everyone who is bitten, when he looks at it, shall live." 9 So Moses made a bronze serpent, and put it on a pole; and so it was, if a serpent had bitten anyone, when he looked at the bronze serpent, he lived.
NKJV
God allowed the structure of the brass serpent to fulfill a designated purpose. However, after the purpose was fulfilled, the people should have destroyed the brass serpent, but they did not. Later it became a curse to them, because when Hezekiah began to purge the kingdom of idolatry the Bible says in 2 Kings 18:4:
KJV4 He removed the high places, and brake the images, and cut down the groves, and brake in pieces the brasen serpent that Moses had made: for unto those days the children of Israel did burn incense to it: and he called it Nehushtan.
Anytime an organizational tool becomes elevated to the role of a holy thing it then becomes an idol. Organizational idolatry is as real as any other form of idolatry. Once the tool has fulfilled its useful purpose and intent and is no longer relevant it must be discarded. Otherwise the tendency of people is to elevate it and reverence it beyond its original intent.
Normally an organization begins when a small group of people unite around a common and shared vision. As success occurs, support positions and processes are put in place to forward the progress and maintain momentum. However there is a great risk in growing the organization, because there can come a point in which it cost more time and resources to maintain the organizational system than is expended on pressing toward its vision and purpose. At this point the organization begins to atrophy. At best it becomes stagnant and unresponsive to change as a slow but inevitable death begins to overtake it.
The only way to offset this is to keep the organization relevant, fresh and flexible. One way of doing this is to continually focus on minimizing absolutely all non-essential operating costs of the organization. There are several layers that must be considered when reducing operating costs.
The first layer is the easiest and most obvious, and that is to cut within departmental spending and control expenses. However, this is the low hanging fruit that anyone can spot easily. Once the low hanging fruit is harvested, leadership must then press toward a deeper and more meaningful layer where the real operational costs can be impacted.
I must state that organizational costs cutting cannot be done from the limited management lenses of the accountant. Management by numbers is the shortest path to ruin. Every student of leadership and management understands that although numbers are very important, you cannot lead an organization through accounting principles. You lead an organization by leading people and managing processes. By guiding people to work on the way the work is done a leader can press into the second layer of cost reduction and that is getting the people involved in changing the way the work is done. People can work together to optimize processes, eliminate every form of corporate waste, and reduce operating costs to a theoretical minimum. Only when this occurs will an organization truly achieve operational efficiency.
For this to occur, the operating structure of an organization must become an inanimate tool and lose all sacred implications. It must be understood that although the message can never change, the method must always change. Serious consideration must be given to any process that expends time, energy, or resources (including financial). Any process that does not add-value to the vision can be eliminated. Only value-adding processes should remain.
It is easy to find where the costs of operations can be reduced. All one has to do is ask the right questions. What layers of decision-making and redundant bureaucracy can be eliminated? How much travel can be eliminated and replaced by online meetings? What documents and publications can be sent electronically instead of in traditional print? How can mailing costs be reduced or eliminated? What meetings can be eliminated? How can people be diverted from fundraising to support expensive programs to adding value to the purpose of the organization? Which staff positions can be merged to achieve more with less? What administrative facilities can be eliminated in order to divert funds to the front lines of action?
Another way to identify cost reductions is to look for the problems. Problems are mountains of treasures, because problems identify the opportunities for improvement. Removing layers of bureaucracy, redundant decision-making layers, and complexity can save incredible amounts of time, energy, and finance. Problems are easily eliminated if the proper attention is devoted to discovering its root cause and implementing the appropriate corrective actions.
Organization guidelines and procedures should never eliminate sensibility and decisiveness. One of the best ways to re-engineer an organization is to begin with its manual of operations and eliminate anything that is irrelevant or non-value adding to the purpose and vision. Once this is done the organization becomes a tremendous enabler instead of a permission withholder. It becomes a blessing instead of a curse.
Every dollar absorbed by non-essential organizational operating costs is actually diverted from the true purpose of the organization. Every dollar diverted from organizational waste to mission fulfillment is a dollar wisely invested. As government has effectively proven the less the bureaucracy and costs the better.
BIO
Dr. Fred Childs holds a MBA in Business Administration and a Ph.D. in Leadership Administration. He is a pastor, author, leading church and business consultant, and leadership authority.
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