Symptom: People feel entitled to their jobs, regardless of their performance, and are not concerned about their productivity or costs.
If an organization has a monopoly and people feel that their jobs are assured, even though they may not be performing as well as competitors, then they have little real incentive to perform better. By contrast, in a market economy, the most efficient and effective provider earns business, while less successful providers go out of business.
This is true for internal staff functions as well as corporations. In an internal economy, going out of business (i.e. outsourcing the whole function) is generally not a healthy option. Nonetheless, providers should experience market pressures to ensure that their performance is competitive.
Clients should be free to buy goods and services outside, i.e., selective outsourcing. This implies that funding for staff services go to clients rather than staff groups. Then, the staff groups earn their budget through fees for services. If they don't offer a fair deal, clients can take their money elsewhere.
Ultimately, this insures the right kind of competitive pressure, while empowering clients and avoiding lock-stock-and-barrel outsourcing.
While most staff functions are not ready for a market economy, its effects can be simulated without actual chargebacks. Doing so solves some resource-management problems while preparing the organization for a later evolution into a marketplace.
Root cause:Internal economy, budgeting copyright 2024 N. Dean Meyer and Associates Inc. All rights reserved.
