Your questions answered, Inside Track, July 2010

This article is filed under: business capability, organisation, organisation design

My company has decided it needs to centralise and standardise some of its practices. I anticipate a lot of resistance from my OpCos. How can I make the process run as smoothly as possible?

Some of it will depend on what and why you have decided to centralise and standardise. Concerns about maintaining proper governance around risk, accounting, and the financial health of the over-all corporation have different challenges from issues around maintaining safety and environmental compliance, maintaining a common culture and brand across regions and separate companies, or questions about where R&D and product development should reside.

Nevertheless, for all of these questions, there are a number of pointers that will help companies through this minefield:

  • Make sure there is a clear business need for any kind of standardisation or centralisation that does not already exist. On the local side, the amount of management time spent away from the customer or growing the business can be immense, costly and mind-numbing.
  • Communicate that business need – whether it’s for financial compliance reasons, safety, building the brand, increased efficiencies (once you’re through the initial slog).
  • Be clear what is absolutely non-negotiable (e.g. when not doing it gets you into legal or regulatory difficulties), and where you’re willing to see variation.
  • Where there is variation, identify with the local operating companies the one or two things that if they were similar could seriously increase efficiencies across the board (incremental change on their part, big efficiencies gained centrally).
  • Now the most difficult part – good judgement and decision-making will beat rules and procedures every time. Build strong underlying values in all your operating companies in such a way that even if there is variation in processes, procedures, rules, or products, you can be sure that each person in every company will be pulling in the same direction.

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