Too Small to be Rational, Too Big to Care: Part 1 of 2
Feb 11, 2011
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Years ago when I worked for a very tiny division of very large oil company I had to get a $2,500 contract approved by the central corporate legal department. This review cost me $4,300. Mind you, one of the terms in the contract was “At no time shall this agreement construe liability to either party greater than the value of this contract…” which, again, was only $2,500. Too late. The sharpest legal minds in the company actually found a way to spend $6,800 on it.
It was then that I realized that, as big and as smart as my parent company was, they couldn’t run a lemonade stand. I once said this out-loud at a CIO conference discussing centralization of IT services and distributing the costs out to each division. If I remember correctly, the VP said “Due to the expertise and buying power of our central IT infrastructure, BIGOILCO IT can do it more consistently, better and cheaper” to which I said “BIGOILCO couldn’t run a lemonade stand”. For some reason he took this as an insult which it was not…merely an analogy. Let me explain to you as I did to him.
“Imagine that my little division sells lemonade. Although both of us take a naturally occurring resource, refine it, ad stuff, and sell the new mixture to people on the side of the road, we are very different in many respects. My stand doesn’t have near the risk that drilling and distributing oil and gas do so we don’t have an army of safety people at every stand. This means we also don’t have an army of attorneys on the payroll either. Also, we sell lemonade so we can pretty much put a picture of a lemon and a glass with a straw in it on our sign and people will get it. You, on the other hand, sell oil and so you have to hire really expensive advertising companies to show tropical fish swimming and little foxes being born next to a pipeline to market your product.”
“As a result, we don’t have much of the overhead that you do and so our per-user costs for IT are much cheaper. At last look, my division was $4,500 per user per year while BIGOIL was $25,000”, I said.
“Do people out there really run IT for $4,500 per seat?” the BIGOIL VP said.
“People do”, I said.
As is often the case with my blogs, I find myself half-way through the article and haven’t related any of this to Kronos, ADP, TimeKeeper, eTime, Workforce Management, HR, Payroll, FLSA, Best Practice or anything you might be reading this blog for. But I told you this story to share a very common situation several of our Big Name clients are in now. That is ‘rationalizing’ all the disparate pay and benefit policies across all their divisions…even the tiny, lemonade-stand-sized ones.
The desire to re-think the root policies and fully understand all the practices usually comes in the middle of corporate-wide Kronos or eTime implementation. Does this sound familiar “All right…grab all your pay policies and PTO rules and we’ll all meet in Fargo and build one big Kronos instance to handle them all. What? You are doing THAT over there?!? Why don’t you do it the normal way?”
In some cases companies do the policy rationalization first and the Kronos/Payroll project second but a simultaneous approach can work too and sometimes is actually the best way to go.
In part II of this blog I will note the different types of conflicts multi-divisional organizations encounter as they go through this ‘rationalization’ process, the good and bad ways we’ve seen them addressed, and most importantly, successfully streamlined and reconciled. I should point out that the best examples don’t always come from the big, brand name companies, as I alluded to in story above. When such disparity of size or market exists between the kingdom and the colonies there is a tendency to see the outliers as ’bush league’ and corporate as the big bully. In my experience, however, there is usually an equal amount of wisdom and baggage on both ends.
You are just going to have to wait for all this wisdom, however, because it is a gorgeous 80 degree day outside and a cold glass of lemonade awaits me on the patio. I only work in Fargo.