THE RECONFIGURATION OF THE CORPORATE STRUCTURE

Share this ARTICLE with your colleagues on LinkedIn .

---

Dear Friends and Fellow Futurists:

Greetings, one and all, and please accept my sincere best wishes for a happy, healthy, prosperous and productive 2009...a year filled with learning, barrier-breaking, renewed self-confidence and self-reliance...a year filled with new friendships and mutually-productive and enjoyable business relationships.

I also offer you a brief reminder to take some time, as frequently as possible, to review the links to other sites of interest which I have placed on this blog for your information and enjoyment. There is a great deal of intense thought (as well as progress!) going on in virtually every quarter of futurism, from Artificial Intelligence to Medicine. My fellow writers and visionaries have been keeping extraordinarily busy -- invest some clicking activity in seeing what they have been doing.

Now, to my subject:

The current economic environment is forcing the issue of a reconfiguration of the conventional corporate structure. Blindly downsizing (a common, instinctual reaction to an anticipated decline in demand) is simply not the answer. As discussed in previous posts, "cutting costs" which are unproductive is a prudent tactic, but the tendency is to cut productive costs (e.g., those which are necessary to sustain the business and to generate revenues) as part of the bargain. In a season of economic panic, business owners and executives, in reacting to the various pressures which crush them, tend to attempt to do a microsurgeon's job with a machete -- blindfolded. A great percentage of these life-saving operations are ultimately terminal.

Every business entity has revenue-producing components and revenue-consuming components, just as every business has fixed cost components and variable cost components. The word "component" is really the key. Businesses are very much like multicellular creatures, and each component is a cell. Each cost is a component of the business.

To restructure business, an increasing number of visionary business leaders are going to start evaluating their businesses component by component, instead of as "take it or leave it" creations which are mired in traditions and policies that may have become obsolete, irrelevant or destructive.

The new methodology will be to break each business up into its multiple essential components, and to evaluate each individual one carefully. After this analysis is complete, some components will be kept, some modified, and some eliminated. Then, the business will be re-synthesized as a functioning whole. This is akin to the notion of "zero-based budgeting" and requires intellectualism rather than barbarianism. It requires precision and care. It requires a new, smarter, more scientific than reactive mindset. In brutally direct terms, it may permit you to let your full-time corporate administrator go (who currently costs you, with all benefits and employment-related expenses, $65,000.00 per year, and who is only being utilized one day per week on average) with a part-time consultant who costs $1,500.00 per month, or $18,000.00 per year, for a savings of $47,000.00 per year. Multiply this savings by a vast number of defined positions and the savings can mean the difference between profitability and extinction.

A business viewed as a multicellular organism can be restructured with a minimum of trial and error required. Every individual component can be evaluated in order to make subtle and surgical improvements rather than sweeping changes which might have unintended negative effects. Every business is modular, and modules can be eliminated, refitted or replaced as required. In fact, the rise of outsourcing, offshoring and subcontracting during this past decade gives further evidence to support this fact.

---------------------------------------------------------------------

If you had hired a full-time employee in 2006 (in the United States, and on the average), you would not only be paying for that individual's salary, but you would also be paying taxes, compliance costs, healthcare, pension, and other benefits equal to roughly 33% of that employee's base compensation. If you chose to terminate that employee, you might have been socked with legal fees. If you didn't hire your personnel along the legally mandated "equal opportunity" employment racial, ethnic, sexual orientation, and other "lifestyle" guidelines, you would have been socked with legal costs and regulatory action. The larger your company, the less choice you were permitted to exercise in terms of hiring based upon merit, and the less flexibility you had with respect to terminating poorly-performing employees.

---------------------------------------------------------------------

In this new and challenging (a euphemism for "crappy") economy, you actually have some options. Ironically, a number of them actually provide benefits to your home country's economy.

When reviewing each module, determine 1) if it is necessary; 2) how much of it - in terms of person/hours per week - you will truly need; and, 3) if it can be addressed by contactors or consultants who are technically proficient enough to minimize any investment in on-the-job training and supervision. After having done this, you will be able to make serious budget and personnel cuts, and convert many of your fixed costs into either lower fixed costs, or into variable costs.

-------------------------------------------------------------------------------------

If you are moved by patriotism, you can retain consultants (as non-employees) to cover those modules which do not require full-time employees. You have flexibility in the tasks that you can assign to them, and flexibility in both the hours purchased and the length of the contract. If you are, for example, a U.S.-based organization, you can retain the limited services of U.S.-domiciled consultants. You needn't outsource overseas. You are, in effect, replanting the seeds of full employment where you have had to cut jobs. And, your business can continue to survive and thrive with a lower fixed cost profile and greatly enhanced operating flexibility.

---------------------------------------------------------------------------------

There are a number of services which provide listing opportunities for freelance consultants, and/or employers looking for specific skills to apply toward specific projects. These services, like guru.com, freelancers.com, and others do have some shortcomings, but if you invest the time searching and interviewing, you may ultimately fill all of your modules. The drawbacks are the time required, the likelihood of a poor "match" and that there is no ongoing feedback, support or quality assurance mechanism. Many of these services tend to be project-oriented, instead of function-oriented. They are not optimized toward replacing a full-time employee with a limited-time contractor on an ongoing basis.

------------------------------------------------------------------

A better approach, in my opinion, is the one taken by Bruce Newman of The Productivity Institute, LLC. (http://www.prodinst.com/) . His firm (which he calls "PI") actually maintains a stable of consultants in a variety of specialties, including, but not limited to, IT, administration, CRM, accounting, telephony and a host of others which relate to marketing, advertising, public relations, and other non-computer specialties. PI rates the consultants in each class using an ongoing rating algorithm and continuous quality control monitoring system, and provides client organizations with a short list of five rated consulting firms in any given modular specialization. This eliminates time, trial and error, and cost. What is every bit as important, is that PI will constantly communicate with each client organization for feedback on the consultant placed there. Consultants pay to be rated and listed, and client companies pay a minimal fee in order to keep PI "on tap." The advantage here is that once PI has developed a clear understanding of what its clients truly require (not only technically, but in terms of interpersonal, corporate culture and qualitative factors), it can be an even more potent resource for supporting the client company's ongoing needs.

------------------------------------------------------------------------------------

In every case, the victors who will triumph through the economic upheaval currently taking place, are those who are willing to look at their companies as multicellular, modular organisms, and to reconfigure their structures and policies to accommodate this new paradigm.

-----------------------------------------------------------------

Faithfully,

-----------------------------------------------------------

Douglas Castle

------------------------------------------------------------------------------

KEYWORDS, TERMS AND ORGANIZATIONS:

globalism, CFR, NGO, UN, WTO, IMF, central bank, outsourcing, offshoring, capital markets, import, export, international trade, strategic alliances, e-commerce, entrepreneurship, social networking, banking, finance, trade, ventures, business, securities, stock exchanges, indexes, futurism, trends, citizen ambassadorship, enterprise, capitalism, international politics, commodities, prime rate, LIBOR, foreign currencies, foreign exchange, blogs, blogging, bloggers, aol, google, yahoo, msn, AP, news, media alerts, world government, world governments, international affairs, treaties, tariffs, trade restrictions, marketing, advertising, business development, arbitrage, obtaining capital, promotion, publicity, EU, NATO, military affairs, government regulation, trade restrictions, liquidity crisis, business opportunities, web-based businesses, communication, communications, technology, intelligence, embassies, consulates, business resources, Douglas Castle,The Internationalist Page, The Global Futurist, international politics, elections, time management, cyberspace, AI, energy, industry, productivity, Mixx, Digg, Technorati, Sphere, Facebook, YouTube, MySpace, LinkedIn, advertising, economics, strategy, management, cooperation, widgets, blidgets, links, incoterms, CCH, UCC, freight forwarding, custom house brokers, diversity, employment, culture, micro-loans, technological convergence, trends, financial planning, FOREX, futures, stock index, inflation, recession, sub-contracting, Department of Commerce, CIOF, the next generation, amnesty, humanitarianism, foreign aid, philanthropy, charity, LinkedIn, singularity, transportation, IT, intelligence, complexity theory, energy sources, shortages, climatic change, pop-culture, survivalism, mergers and acquisitions...