We’ve all been there: hour-long meetings in which staff add their pennyworth, managers do the right ‘HR’ thing by listening – and then everyone walks out without any decisions being made. Worse still, people leave unsure about exactly what action they are personally meant to be taking as a result.
According to groundbreaking research by Warwick Business School and Simplicity Partnership, this is typical of the behaviours that cause bad complexity and reduce business performance. Their academic study of Forbes 200 companies (the biggest in the world) puts the cost of this bad complexity at 10% of profit a year, or an average of $1.2 billion (£735 million) each annually.
This is disturbing, particularly given some of the drivers of bad complexity are easy to combat. Recognise these behaviours in your firm? Management over- engineering, making everything more complex than it needs to be for the audience in question; teams focusing on too many small things, failing to identify and prioritise opportunities that create real value for the business; creating a new way of doing the same thing or giving something a new name when it doesn’t need it… Or, how about all those employees that add more and smarter-sounding words, while really just saying the same as the last person?
Complexity gradually creeps into strategy, organisational design, processes and behaviours. According to Warwick’s research, there are more than 100 common sources of complexity in business, falling into six main categories: external, strategic, organisational, process, product – and people.
Simplicity founder Melvin Jay tells me of one CEO who identified five priority global projects. Once this had been communicated, the HR department went to the three levels below the board to see how this strategy had been translated into objectives and projects in each function.
It was a classic case of Chinese whispers. By the time it reached this level, the original five priorities had become 20.
As our cover story shows, complexity is one of the biggest business issues today, yet few are tackling it. This is often because they think it is too difficult. But if your company were wasting 10% of marketing spend or R&D investment, you would not be ignoring the problem.
Nalin Miglani, CHRO of Tata Global Beverages, points out that “too much simplicity can also lead to poor performance”. The key to addressing this is to identify good and bad complexity – and where good turns into bad.
HR can take a lead by identifying costly complexity, simplifying procedures and changing management behaviours. It is a great opportunity to put HR right at the heart of the business.
By : Siân Harrington