One of the well know problems of groups is that group-level functions can become bureaucratic and self serving – (no comments about Ashridge functions of course!). The reason why this happens is because it is hard to hold them to account. A business unit can be held to account for profit by its parent, for value for money by its customers, for fair dealing by its suppliers and for decent jobs by its employees.
However, an HR group-level function is difficult to hold to account. There is no bottom line for the CEO to look at. The customers (the managers in business units) have no ability to discipline HR if it is not delivering. Internal suppliers of information or IT have no easy redress if the function become tyranical. Only the managers and employees within HR have any ability to hold the function to account. For this reason, over time the function at the group-level often becomes self-serving rather than business-serving.
The solution is to disect the group-level activities in these functions and subject them to rigorous challenge.
1. Is the activity required for governance or compliance reasons?
2. If not, is it a necessary part of some larger initiative or influence that is expected to raise performance by at least 10% above what it would have been with out the group involvement.
3. If not, is it an obvious (ie non contentious) source of extra value and low risk to implement. Risk is assessed in three ways. Is there little risk of the activity being done badly? Is there little risk that the activity will constrain the commercial endeavours of the business units? Is there little risk that the activity will absorb the time of any top managers?
4. If it fails to win a place on any of the above, the last challenge is about whether the activity is necessary because it is part of a legacy that is being wound down or part of an effort to change the status quo so that future initiatives to add value will be easier.
If it can’t be justified agains any of these four challenges, the activity should be stopped. The underlying logic is that the time of top managers is scarce. They should not spend any time on activities unless they expect to improve performance by at least 10 percent. If they can find three or four such activities, they are doing a great job. Everything else should be stopped unless it is governance; low hanging, non-contentious fruit; or a legacy that is being worked out.
Ashridge on Strategy 