Sunday, January 24, 2010

Reducing Organizational Costs as a leader

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.

How to Make Decision as a Leader

Most leaders must constantly work at making decisions simple. The implication of a decision will always be complex enough, and sometimes we try to solve or deal with all the implications - the how, who, why, how much and so on at the same time we make the decision.

What are the five to ten most relevant, proven facts in this situation?

  • Right up front, distinguish proven facts from what are simply your assumptions. Assumptions are what we believe to be true. They can be very faulty foundations on which to build your decision. A proven fact is "Last month the house down the street sold for X dollars." An assumptions is "I think houses in this neighborhood will generally sell for about X dollars."
  • The most frequent violation of sound decision making is tryi9ng to decide before all the facts are known. Somehow in our minds we have a need to decide now, a need to bring closure, a need to have things settled. Because an undecided situation often brings us stress, our minds compel us to make a decision too quickly before all the facts are in. "Once the facts are clear, the decisions jump out at you." Find out the facts!

How will this decision impact all the people involved?

  • Who are the main players? Who else will be affected? People in other departments? You spouse and children?

What will be the long-term impact of this situation?

  • What will be the long term impact of this decision?
  • How would this decision affect people a year from now? Five or ten years from now? By the time the children leave home? By the time I retire?
  • The more reversible the decision and it's consequences the freer you are to move faster in making it.

What legal, moral, or ethical concerns are involved in the decision?

  • Be clear on these factors, especially if it's a big decision involving major commitments of money, time, and energy and affecting a number of lives.
  • Understand the difference between these three categories. Legality is based on a coded law. Morality is based on a moral code or trust. Ethics are based on an accepted local or cultural standard.
  • Sort out these terms and their application to your decision making process, since some decisions you make could be legal and yet immoral or ethical and yet illegal.

Have I written down the basic issues involved in this decision?

  • Simply getting everything on paper can be very helpful. The bigger the decision, the more helpful it is.

What are the trends related to this decision?

  • A trend line is one way to help you establish a context for sound decision making. As trends change, the context changes. Therefore, the meaning of each fact you're considering also changes.
  • What are the trends related to the major decision you're making? Are prices going up or down? Is demand greater or less? Are complaints fewer or more frequent?

What other lingering questions do I have?

Maybe you've been ignoring some of the questions or concerns in you mind. Bring them out into the open and be sure you deal with them before you make the decision.

Principles To Guide Your Life

What are some of the principles that greatly impact our lives and help us become mature, growing, productive people? Listed are principles to guide your life:

  1. Your attitude determines your altitude.
  2. It’s not what happens to a person, but what happens in a person that makes the difference.
  3. Every problem has a hidden possibility and a seed of victory in it.
  4. Failure is not final. Learn from it and go on.
  5. Limitations are guidelines, not stop signs.
  6. Expect the best and express the best.
  7. There is not much difference between success and failure. The successful usually gave just a little bit more.
  8. Each person can increase a little. You can improve your attitude, relationships, priorities, determination and credibility a little each day.
  9. Helping others succeed helps you to succeed.
  10. Be yourself – that’s who God made.
  11. People don’t care how much you know until they know how much you care.
  12. Live what you teach.
  13. Pay now and play later.
  14. Giving is the highest level of living.
  15. Success is having the respect and love of those closest to you.
  16. We make a living by what we get, but we make a life by what we give.
  17. There is no success without sacrifice.
  18. No matter where you’re starting from on your journey of life, you have some things going for you.
  19. Successful people develop positive daily habits that help them to grow and learn.
  20. It’s lonely at the top… so you’d better know why you’re there.
  21. If you need the people, you can’t lead the people. A co-dependent relationship seldom grows or moves forward.
  22. Are you gonna get any better, or is this it?
  23. Opportunities are seldom labeled.
  24. Circumstances do not make you what you are… they reveal what you are!
  25. Look carefully at the closest associates in your life, for that is the direction you are heading.

How To Gain Loyalty As A Leader

Some of the things you can do in your own congregation to rectify any lack of loyalty are:

1. Teach the difference between faithfulness and loyalty.

2. Remind your people that, according to their new nature, they already want to be loyal. Unless they are outright rebels, disloyal acts come out of ignorance and/or weakness of the flesh.

3. Let them know, in light of their sharpened understanding, you are expecting them to be loyal. They will be what you expect them to be.

4. Be careful about whom you appoint to places of responsibility. Look for loyalty, not just faithfulness.

5. As a leader, practice those qualities of leadership that will help people become more loyal to you. Remember, you are representing Jesus to your people. We are faithful to Jesus because He is our Master and Lord. We are loyal to Him because He is our Brother and Friend.