This article originally appeared on LinkedIn.
Andy Grove, the former CEO of Intel, once wrote, “Just as you would not permit a fellow employee to steal a piece of office equipment, you shouldn't let anyone walk away with the time of his fellow managers.” But we all know that such thievery happens often, even if unintentionally.
The situation has worsened since Grove ran Intel. My colleagues at Bain recently used innovative analytics tools from VoloMetrix to examine the time budgets of 17 large corporations. We discovered that companies are awash in e-mails, with many executives receiving 200 per day. Some 15% of an organization’s collective time is spent in meetings—a percentage that has increased every year since 2008. Yet real collaboration is limited, because up to 80% of the interactions reviewed took place within departments, not across business or functions, and the wrong people were frequently at the meeting.
A handful of companies have learned how to attack this problem directly, as we detailed in a recent Harvard Business Review article. There are two practices in particular that I have seen pay big dividends.
The first is to create a zero-based time budget. Just as some companies develop their operating and capital budgets from scratch each year, rather than taking the previous year’s budget as a starting point, the best companies have zero-based time budgets as well. Their mind-set is: We will invest no additional organizational time in meetings; we will “fund” all new meetings through “withdrawals” from our existing meeting “bank."
Alan Mulally instituted this practice after becoming Ford’s CEO in 2006. Mulally asked his team to ruthlessly assess the efficiency and effectiveness of the company’s many regular meetings. The team eliminated all unnecessary ones and shortened those that were unduly long, which forced people to maximize output per minute of meeting time.
The centerpiece of Ford’s approach is a weekly session called the Business Plan Review (BPR). It brings together the company’s most senior executives in a focused four- to five-hour session each week to set strategy and review performance. Content for the session is standardized, reducing the extensive prep time previously required. The implementation of the BPR helped the company to lower overhead costs at a time when rivals were seeking a government bailout. It also improved the quality and pace of decision making at the company, accelerating Ford’s turnaround.
The other key practice is to simplify the organization. Every additional supervisor or manager adds costs well beyond his or her salary, in the form of meeting time, review time, and support staff positions. We have found that on average, adding a manager to an organization creates about 1.5 full-time-equivalent employees’ worth of new work (the manager plus half of another employee’s), and every additional senior vice president creates about 2.6 worth. The caravan of resources accompanying a manager or a senior executive adds further work and costs.
The University of California at Berkeley learned to simplify in 2010 after the state legislature cut $150 million from Berkeley’s budget in response to a mounting deficit. To safeguard the funds needed for teaching, research and access, the administration had to find ways to streamline its cost structure.
Robert Birgeneau, then chancellor, launched a program to dramatically improve the efficiency and effectiveness of the HR, finance, IT and general administrative support units. Before it reorganized, Berkeley had average spans of control (the number of employees reporting directly to a manager) of around four, compared with more than six for average companies and closer to 10 for best-practice companies.
Fixing spans of control, simplifying work by function, and sharing management across departments removed hundreds of unnecessary supervisors and freed up an enormous amount of organizational time. The restructuring has saved the university $120 million annually while enabling Berkeley to deliver more with less.
With these practices, Ford and Berkeley didn't just lower their overhead expenses. They also liberated countless hours for employees to spend their time more productively.