From the various projects I have been involved in, I estimate that organizations could save at least one third of staff costs with Vertical Compression, yet without massive layoffs.
The individual is both strategic and hands on at the same time. The individual reinvents to be able to present strategic thought in boardrooms and yet know the nuts and bolts on the ground. For junior folks, it means finding senior mentors who are willing to impart their years of experience. For senior folks, it means going down the vertical to pick up operator skills. Vertical Compression occurs when we rebuild teams so that a single person has multi-variate skills in top down strategy as well as hands on processing and operations. Creating multi-layer managers who "manage" teams of hands on operators is no longer a structure that organizations and CEOs can afford. Gone or going are the days when middle to upper managers can build empires to rule over. There are two types of Organization Compression - vertical and horizontal. This is a deliberate multi-year plan rather than a knee jerk reaction just so that a CEO can present a nice picture at the next quarterly shareholders meeting. I am proposing a new concept - Organizational Compression.
However, I wonder if there has been thought given to the individuals impacted especially those with families to feed ? Or has thought been given to the potential loss of organizational knowledge since some of the impacted individuals are likely to be the "more expensive" ones who have been in the organization for some time ? This may achieve short term results in perceived shareholder value. The easiest and fastest way I have seen most CEOs do is making swift and massive job cuts. As revenue and product cycles get shorter and more volatile, CEOs are increasingly facing the challenge of maintaining a sustainable cost structure.
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