Profit Boosting Tip – Cut Out Layers

March 30, 2012 by  Filed under: Management 

Big businesses love their hierarchies and love to add layers. They are full of middle managers on their way up the corporate ladder who see success in terms of how many people they have in their “empire” and how many layers they have in their teams. It can be hard to resist the pressure from these managers telling you how busy everyone is, how someone has too many direct reports and how they need a specialist team in place for certain things.

Don’t fall for it! All it does is add complication and unnecessary management controls and you rarely see this in thriving smaller businesses. That does not mean you have to do everything yourself – and of course, as businesses grow there will absolutely be times when you have to add in some layers to cope with the business. But there are some simple ways to make sure this is still effective for your business:

1. Number of layers

Think about how many layers separate you from the customer. If you are going through 3 managers to find out what is going on you can pretty much guarantee the picture you see will get “interpreted” 3 times before you see it.

2. Managers managing

If you have people whose job is managing people, with no real role for themselves, that should ring alarm bells for you. Unless you have a very big operational/people model there really should be no need for this.

3. Handling process and problems

If the proposal for extra layers includes managing problems caused by lower levels, spending time on your recruitment methods, salary of the lower level or reward schemes will nearly always be cheaper for you in the long run. Similarly if you can’t manage without a layer because your processes are not good enough, then sort this first before you invest in another layer of management

4. Retaining good staff

Never build in an extra layer to promote an individual or give them development – there are far better ways to retain good people and stretch them than building a fake job, which also leaves a legacy long after that individual has gone.

5. Decision Making

Many layers come about because managers are not making the decisions they need. The team underneath are helping them to analyse data, research ideas and build PowerPoint presentations – anything to put off making decisions about moving things forward. Look carefully at your decision making process and authorization before any layers are added in.

Of course there are times when layers in your business are unavoidable. But with every layer, ask the question – what profit do I get from having this extra layer in my business and what would happen if they were not there? You may be surprised how much of your profit is being eaten up without any real benefit to you – or the customer.

Take action NOW – challenge the layers within your business AND click here for more profit boosting tips.

Want help improving your business results? Visit our website to get our free report – “52 Ways to Boost Your Profits”. Kate Marsden is founder of Ignition Key Ltd and has 20 years business experience working at Director level for a number for well-known organisations. Kate provides businesses with advisory, support, coaching and mentoring services to enable them to step change their performance and results. For more information visit http://www.ignitionkey.co.uk/signup.aspx.

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