If You Reach for a Person When the Problem Is a Process, You’ll End Up Paying for Both

By James Walker, an independent board chair, non-executive director and Chartered Internal Auditor who has led internal audit teams at Credit Suisse and UBS.

All too often, organisations attempt to solve structural problems by increasing their headcount – given this does not solve the underlying issue, they may be left wondering why their costs and risk exposure keep growing despite having taken decisive action. At the time, it may have seemed simpler to hire an additional expert or two in the hope they could rectify what was going wrong within the business. But in reality, those who reach for a person when the root of the problem lies within their processes aren’t solving the underlying issue – and will therefore eventually end up paying for both.

Uncover the underlying problem

Creating extra layers of management, taking on new hires, or even bringing in consultants are all valid pathways should there be additional demand, a need to diversify the organisation’s knowledge base, or a requirement to drive growth.

But when it comes to unclear ownership, duplicated work, poor information flows, weak controls or processes unfit for purpose, there is little that extra people can do to solve the underlying problem. Indeed, adding to the headcount may well exacerbate the issues as increasing numbers of people attempt to compensate for systems plagued by complexity.

This way of working gradually becomes more ingrained in the daily operations of the organisation, until eventually workarounds become embedded in the operating model – adding new inefficiencies, unnecessary tasks and, ultimately, creating inordinate amounts of wasted resource. Multiple spreadsheets replace ineffective digital systems, duplicated data adds to administrative burdens, and customisations within each department deter information sharing between teams.

We often see the impact seep outside of the internal workings of the business, and begin impacting external experiences and perceptions, too. Consider, for example, a grant committee working through a long list of applications in one sitting – the same people relying on a more efficient process could see waiting times for approvals cut from months to weeks.

Ironically, the additional workload generated by poor systems becoming part of the organisation’s DNA may prompt consideration of expanding the workforce further. But, before even more new hires are brought into this tangled web of inefficient processes, leaders must take a step back and identify whether demand has genuinely increased – or whether more resources are being required to produce the same output.

Value v cost

The requirements of a new role can often provide a clue as to whether there may be operating issues which have triggered the desire to hire additional bodies. If a job description centres around actions involving checking or correcting processes, and reconciling or escalating identified concerns, then further investigation into the flaws of the organisation’s operating model may well be necessary.

The cost of hiring goes far beyond the person’s salary. With recruitment, onboarding, training and management time to be factored in, the tangible value added to the organisation as a result of the extra role must outweigh the overall cost. A comprehensive assessment should also be undertaken before decisions are made, to understand the risks associated with increasing headcount versus enhancing or fixing processes.

Creating additional roles to ensure thorough checks reveal any errors created through inherently poor processes can actually weaken accountability. Good governance relies on clear roles and outcome ownership, something which becomes increasingly complex if multiple people have oversight of a process. This is where adding oversight should not be confused with strengthening control.

When considering value, we also need to decipher whether a person’s input is focused on managing meaningful risks, or whether they are instead compensating for unreliable processes. A manual comparison of two systems by a new hire may identify where there is a discrepancy which can be reconciled. But the really valuable outcome only occurs when organisations stop to consider why the systems are misaligned, and then rectify the underlying problem.

Difficulty or demand?

The Board’s oversight of budget approvals means they are well placed to ask questions about whether there is a genuine need for recruitment, or whether there are inefficiencies or process problems leading to a perceived need for a larger team.

If a department is asking for extra resources, the focus must be on distinguishing whether the reason for this is the unnecessary difficulty involved in their work, or whether demand has tangibly increased. Before a decision is made, it can be useful to ask what has specifically created the additional workload? How much of this work adds value? Are there processes which could be fixed? And would doing so mean extra people were still required?

There are a multitude of reasons to boost headcount, where human expertise is required to exercise judgement, build relationships and create value, for example. But if their input will instead largely involve moving information between systems, correcting recurring errors, or compensating for unclear accountability, then the organisation is simply utilising them to patch process failures.

Eventually, the process will still need fixing. But if you realise that too late, you may well have spent months – or years – paying a team to work around the problems rather than solve them.