Tuesday, April 4, 2017

Here's a Corporate Model Worth Trying

   I thought on it, when my brother noted Simplot once brought in a subcontractor for the kitchen, for food services. I thank him for getting me thinking on how, sometimes, large companies would be better off if they took many of their parts and made semi independent businesses of them.
   Here's why: Mid management in a company often does not have attention to the bottom line. Instead, the managers look at success as achieving the the functions they are entrusted with. Unfortunately, their look for success can include unnecessary travel, and unwise expenses. Sometimes, even, they look at expenses as simply a way of improving their departments. If they can hire an employee to do this, or to do that, it will mean things can be done that clearly will make the department better. So hire the person.
   But businesses need to be profit-driven in order to survive. If they hire too many mid managers, or too many employees, or succumb to too many department-improving expenses, they will go broke.
   So, here's my perhaps novel idea. Maybe it would work, maybe it wouldn't, but it might be worth trying. Whenever you have a department that could be operating on its own, on a profit or loss basis, give 49 percent of it away. Bring in a managing partner (who owns the 49 percent) to make his or her living off the profits. The partner is thus profit-driven, for if he doesn't make a profit, he doesn't make a living. The partner sometimes will be more driven, himself, as the job becomes more of a personal thing than just a punch-the-clock effort.
   Maybe it isn't altogether a novel approach. I do see companies bring in subcontractors. Still, I don't think this model is used much, if at all. I don't believe it is common to split the ownership with the subcontractor,

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