User:Bondurant/sandbox

Essay - Life in a modern corporation (Under construction)
This essay is intended to give some insight into what really happens in a major global, publicly owned company. This comes from my own experience, and reflects what I see on a day-to-day basis. The personalities in an organisation, the market pressures and why it is all so broken. Dilbert, this ain't, the reality is often far stranger.

A major company
The company I work for is a FTSE 100 company and has been for about 4 years. Prior to that, we were a wholly-owned subsidiary of another FTSE 100 company - a major retail organisation in the UK, but with some well-known global brands. My own company - let's call it X for name's sake - already had a global presence, and not many people even knew about its ownership status. X is a financial services company, not a bank, but which counts many banks amongst our clients. The reason for our demerger was given that the investors in our parent didn't really understand how X fitted in, and so would operate better independently.

Currently, about half of our revenue comes from the US, most of the rest from Europe, and we are also expanding rapidly in Latin America and Asia-Pacific.

Divisions, departments, matrices
X is a large company, employing over 15,000 people worldwide. Our leaders are very careful in promoting a unified public image, but inevitably we have many different divisions. We have:


 * Businesses and directors in each country
 * Divisions covering different customer areas (at least 5 that I can think of)
 * Divisions covering different products (at least 3 in most of our larger countries)

If you imagine a matrix structure combining all of these, and a cats cradle of reporting lines to different directors and you'll begin to understand how complicated things can get.

Like many large companies, X hasn't gotten to where it is today without hoovering up some other companies along the way. You'll notice, if you follow company financial statements, when they quote organic and inorganic growth. Organic growth is how much the company has grown its existing business over the past year, while inorganic growth factors in any organisations it has bought over the year as well. X has been steadily growing both ways.

X is clearly the product of many different organisations. When a company is taken over, it takes years to fully integrate, and often never does. If you've ever used Microsoft Visio, you'll notice how its look and feel is completely different to the rest of Microsoft Office. This is because Visio was previously owned by a different company, taken over by Microsoft in 2000, but even today is clearly built in a different toolkit. X is no different.

All of our products have a different provenance, and most of them do not integrate well with each other. In some cases, different divisions will manage to create competing products, which has in the past lead to some comical maneuvering between the various personalities involved, followed by some marketing material that demonstrates just how well our solutions complement each other ("Honest, guv, they only look like they do the same thing!").

Targets, targets everywhere
Proponents of the free market would have you believe that a companies know best how to manage themselves without outside interference. Companies that are managed well survive, while those that aren't will struggle. To a certain extent this is true. What is often glossed over is the fact that companies are not a conscious entity in themselves, but are made up of real people, some of whom's goals will not always match up to the company in which they work. The reason for this is: Targets. Targets are what drives a company forward, normally in the form of increasing sales revenue. They are necessary for a company to grow and they are necessary for individuals to be rewarded for their efforts. They are also necessary to prove to the market that the company has ambition and attract investment, but it's a tightrope; fail to meet the previous year's targets then investors will see an under-performing company and start dumping their shares. The way targets work is this: The Chief Financial Officer (CFO) will take all the information available to him about his company's prospects over the coming year. This will cover things like growth potential in emerging markets, the lower growth available in established markets, economic conditions, competitor pressures, expected risks, and so on. The CFO will then ignore all that and then pluck a figure out of his ass that he thinks the investors want to hear. An army of company accountants then spring into gear and cascade this growth amongst all the various sales teams in the company. The sales managers have little say in this, although they may be able to tweak the figure down a little - but never upwards. Consequently, the sales managers are often left with a target that bears little resemblance to their actual sales opportunities over the coming year. It's not unknown for some sales managers to simply jump ship because they've been set an unrealistic target. They are in a difficult position: fail to hit their targets and they are in trouble with the target-obsessed management. If they do happen to have an exceptional year and exceed their target, then next year they will have to achieve even more. This is in a market where their share cannot significantly grow and where our clients are beating us down on price harder than ever. Other sales staff will go down the route well known to most people - they stop short of selling their own grandmothers to hit their targets, but only just. In X, we have a concept of "good" money and "bad" money. Good money sales bring repeated revenue - any software we sell should have an annual licence with a fixed term, typically 3 to 5 years. At the end of the term, we renegotiate and hopefully upgrade them to a newer version. Conversely, Bad money sales have perpetual licences, with one-off revenue in the year of sale. There is no end of term, and it is very hard to sell them an upgrade or buy into the licence model in future. We are not supposed to make Bad sales at all, but in practice it happens all the time. A salesman with a big target will try to sell anything, often at a discounted rate and sweetening the deal with perpetual licences, just to hit his target and secure his bonus for the year. He probably doesn't care what happens in future years, because he'll be feted as a sales person and move to another team with easier targets, or else leave the company entirely. The people left behind have to sort out his mess; to deliver on his inflated promises, exaggerated claims and to deal with the difficulty of trying to find new revenue to meet next year's target. The perpetual licence is a self-made competitor - for all the good it does us in subsequent years, we may just as well have installed a competitors product.