Why don’t back-office efficiency drives stick?
A granular look at back-office operations shows why across-the-board cuts make no sense.
The McKinsey Quarterly - January 2010 • Marco Ferber, Jürgen Geiger, and Klaus Kunkel - Source: Operations Practice
Difficult economic times are spurring many CEOs to demand cuts in corporate back offices. And no wonder: finance, HR, IT operations, and other support functions can represent 15 to 20 percent of a global company’s personnel expenses and are thus prime targets for retrenchment. Yet the savings are often fleeting—we find that barely four in ten companies meet their targets one year into a cost-cutting program, and by year four fully 90 percent of back-office costs are right back where they started.
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