A friend of mine implements HVAC projects in large malls and institutional buildings. He is under tremendous to deliver his projects in time. He found the pressure of tracking outstanding tasks painful and hence had kept an EA for that. Despite this, his challenges seem to be growing and projects getting delayed.
I started discussing his control systems with him. He had hired professionals and delegated authority to negotiate with clients and workers to get things done to his employees.
Everything seemed good until we came to financial controls. No one in his organization was empowered to undertake any expense. He very proudly told me that how even a purchase of Rs. 5 pens at the site had to be approved by him. With one stroke, he had undone everything he had done in other areas.
In contrast, when Ritz hotel wanted to ensure that all its clients go back happy and adopted the credo to provide the genuine care and comfort of our guests is our highest mission and pledged to provide the finest personal services and facilities, modified its systems and
provided imprest to all its customer-facing employees so that they could cut time and procedures to ensure that client’s needs are fulfilled.
In effect, Ritz made a conscious decision to bear the cost of small frauds or to give up the benefit of centralized purchases to achieve speed. That also was its strategy to achieve fully satisfied clients or in other words, fulfill its mission.
The systems in our organizations have to be designed to help us achieve our goals and build a competitive advantage. Systems flow from purpose, goals, strategy, and culture. Consultants can help CEOs by designing systems to their specifications and software can help us bring better controls and discipline. But at the end of the day, its vision, people and
processes help founders create great companies.
But very simple systems can be devised for tracking all expenses, with approvals at various levels based on authority distribution.
Yes Sir. But in bigger organizations working with multiple currencies and products, it is slightly complex. Buereacratic systems act as barriers to company achieving its goals.