|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
SEPTEMBER 18, 2006
By Jack and Suzy Welch A Twisted Chain Of Command Far too often, crucial departments like IT or HR report to finance instead of the CEO I work for a company where the information technology department reports to the head of finance. He never has time to evaluate IT projects, so IT gets attention only when there is a burning issue. This is a problem, isn't it? -- Anonymous, Harare, Zimbabwe It sure is. In fact, that sound you hear is the collective groan of hordes of people, just like you, who have watched this dysfunctional dynamic play out in their own organizations. And we're not just talking about IT getting buried or neglected until a crisis strikes, though that's bad enough. The more onerous problem suggested by your letter is the far-too-frequent Rasputin-like dominance of the CFO. O.K., maybe Rasputin is a bit extreme. But it's not going too far to say that chief financial officers can, and very often do, wield too much influence within companies. And if it's not the CFO, it's the so-called chief administrative officer who has excessive power, overseeing finance itself, human resources, and any number of other staff departments. Whichever it is, this extra management layer generates bureaucracy at its worst. The person holding the CFO or chief administrative officer title inevitably becomes the company's mandatory go-to guy -- the bodyguard through whom every question and decision must pass before reaching the CEO. Their jobs become catch-all bins for projects, people, or whole departments that the "overburdened" CEO, with just too many direct reports, is said to be too busy to deal with. It's just wrong. So why does it happen? With IT, the explanation is easy: It's an historical hangover. Initially, IT was mainly seen as good for lowering costs and increasing efficiency. In those days, decades ago, there was some logic to having IT report to the CFO. Most good companies, however, took IT out of finance when its broad strategic utility became obvious. Others, apparently yours included, did not. As for HR reporting to a chief administrative officer, there can be no good explanation for such a situation. With its critical role in hiring, appraising, and developing people, HR is so central to success that it's practically criminal if the department doesn't report directly to the CEO. When it doesn't, you can only assume the CEO doesn't get the people thing, someone else is actually running the place, or both. Which brings us to the consequences of this dismal situation. The first is that front-line IT and HR managers, who usually have among the most relevant ideas and information, do not get heard high enough up in a timely way. Their insights often get filtered before making it to the CEO or the board by the cost-sensitive CFO, of all people! And companies where the CFO or chief administrative officer reigns supreme have a much harder time attracting top people to HR and IT jobs. The best and brightest will always choose to work where they have a seat at the table equal to the CFO. Why shouldn't they? Smart companies recognize their value and reward them with pay and prestige. So, absolutely, IT shouldn't be reporting to the CFO. No key function should report to a bureaucratic layer. Your painfully common problem makes clear why that is so. Are consultants good or bad? Under what circumstances would you bring them in, and what does bringing them in say about the skills of your own people? -- Kendra Stringfellow, Albany, N.Y. Your question is sort of like asking: "Are doctors good or bad?" The answer is, some are good, some are bad, but either way, you want to spend as little time with them as you can. Look, the problem with consultants is they're fundamentally (if surreptitiously) at loggerheads with managers. Consultants want to come into a company, solve its mess, and then hang around finding and solving other messes -- forever. Managers want consultants to come in, fix a specific problem fast, and get out, also forever. The tension between these conflicting goals is what makes the use of consultants intractably problematical. Certainly, consultants can be useful. Sometimes a company needs fresh eyes to assess an old strategy or a new product. Sometimes a company simply does not have the in-house skills needed to make an informed decision. These days, private equity firms are effectively using consultants to evaluate the markets and industries of potential acquisition targets. But in any dealings with consultants, the byword is "caution." Before you know it, they're doing bread-and-butter work like strategic planning -- your work. After all, that's what they want, even if you don't.  Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com For their podcast discussion of this column, go to www.businessweek.com/search/podcasting.htm
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2006, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version