Reinventing corporate headquarters
think: act CONTENT
2006
"Little academic research has been done on the topic even though it is clearly of interest to CEOs and often is a focus of their activities, particularly early in their tenure. As a result, reductions in corporate headquarters are often very visible decisions."
David J. Collis, Harvard Business School
The signs are too obvious to be overlooked. No sooner had he taken office, than new DaimlerChrysler boss Dieter Zetsche announced a radical shake-up at corporate HQ. He even informed the workforce that they would be moving back to the old main building. Corporate functions are now following in the footsteps of production. Every possible avenue is being explored to intelligently reduce the headcount, make workflows more flexible, outsource activities at low cost and make processes even more efficient. 6,000 jobs are to be cut – a 20% reduction – in the space of two years. Billions are to be saved in either year. Meanwhile, T-Com, Deutsche Telekom’s landline business, is planning even more drastic changes. Its management wants to see corporate functions completely reshuffled. In their view, only 1,200 of the 8,000 staff who currently populate the company’s Bonn headquarters should still be there at the end of the day.
The fact that such moves are being made comes as no surprise. Both employees and the public at large have long expected them. Corporate HQs everywhere are perceived – both internally and externally – to be vulnerable. More and more questions are being raised about the "parenting advantage", about the value they add to their respective companies. Whatever the tasks and resources assigned to these units, stakeholders are baying for far more efficient and effective structures. What is surprising are the reasons being put forward by managers. Zetsche claims to want to "unleash DaimlerChrysler’s full potential" with a leaner HQ, while the T-Com management says its new structure will let the company "improve the service it provides to customers".
These examples clearly show that more is at stake here than cost-cutting. In future, necessary changes will no longer only be effected by, but also at, corporate headquarters. Hitherto, this has tended to be the exception. Now, all the signs indicate that a new trend is emerging: Lean HQs and decentralized companies are evidently the order of the day.
