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Context / Scope of project
Our client, a leading Australian media company, had grown rapidly through acquisition. In an effort to achieve economies of scale, overhead costs had grown, but centralisation had not delivered the benefits anticipated. This was largely due to the disparate needs of business units, combined with a lack of line accountability for the costs incurred. A PIP team undertook a rapid review of central functions with the aim of (i) eliminating or simplifying services to reduce cost, and (ii) transferring costs back into the business units where they could be rationalised.
Client achieved:
- Restructuring announced (to individual level) within 7 weeks of starting the engagement
- 20% of FTE spend eliminated by (i) eliminating outcomes, (ii) reducing targeted service levels, and (iii) simplifying tasks
- Additional 20% of FTE spend transferred back to the BUs for rationalisation
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What we did:
- Developed governing principles and key hypotheses with the CEO and leadership team – with a requirement to justify centralisation based on a “material and manifest advantage”
- Worked with line management and heads of function to confirm opportunities to eliminate activities or devolve them to BUs
- Worked with the CEO and CFO to simplify governance processes and eliminate costs
- Worked with line managers and heads of function to identify opportunities to reduce shared service headcount
- Realigned line accountabilities and KPIs to reflect decentralisation of functions that had previously been shared (e.g. HR)
- Agreed retention strategy and approach to redundancy with HR and function heads
- Defined opportunity value with client leadership team and agreed detailed implementation plans, accountabilities, milestones/KPIs for FTE reductions
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