Is Parkinson's Law adding to your marketing costs?
It was in 1955 that C. Northcote Parkinson published a humorous satirical article in the Economist, which described the natural tendency in the administration and bureaucracy of organisations, for officials to make more work for each other. This commonplace observation that work expands so as to fill the time available for its completion, is generally known as Parkinson’s Law, which can be applied to every organisation, whether public or private. Parkinson showed that there need be little or no relationship between the work to be done and the size of the staff to which it may be assigned. As organisations grow so generally does the bureaucracy.
As commercial organisations grow, so they become more complex. While the original organisation was fairly simple comprising production sales and finance, so they developed into many nefarious departments which appear to have importance, such as human resources and compliance, but which invariably add to costs and add little or nothing to the necessary income on which the business survives.
When confronted with a proposal for investment, the chief executive of the old merchant bank, Singer and Friedlander, was known to say “will it make shilling”. This statement was intended to focus minds that all activities had to contribute directly or indirectly to producing profitable income, and its principle can and should be applied across the whole of every business organisation.
The sole purpose of every business is the production of profitable income, and marketing is the management process that encompasses all those activities which produce sustainable profitable income by anticipating and satisfying customer demand. To make profitable income, the marketing function must be efficient in its use of resources.
How good is your marketing organisation? Does it deliver what is expected of it? Is what is expected clearly understood throughout the business? Is it fully employed, or has it also grown to fulfil Parkinson’s Law? Is its organisation effective in use of time investment and contribution, and how do you know?
Company departments often have no clear definition of purpose, with uncertain objectives and standards of performance. Of all the various business functions,- finance, production, personnel, - that of marketing is often the least clear in terms of its responsibilities, purpose and clearly stated objectives. Without a clear definition of purpose, seeking relevant measurements of performance is unlikely to be helpful in effective management. Performance can only be judged against defined objectives.
Although marketing departments appear to have distinct specialist areas such as sales, advertising and promotion, research, and customer relationship management, in practice this is often not the case, as job descriptions can be broad and ill defined. The marketing function therefore undertakes a wide variety of activities not all of which are directly related to customers and sales. However, every business activity that contributes to customer satisfaction, contributes to income production.
Marketing managers are responsible for managing resources efficiently to produce results.
It is important therefore to periodically assess the use of resources to ensure manning and costs do not become inflated. It should be a prime concern of marketing managers that the business retains and develops the necessary corporate knowledge concerning its customers and market while at the same time, looking for ways to streamline the organisation.
While, any direct contact with the customer should be kept in house in order to maintain effective customer relations and retain necessary corporate knowledge, many aspects of a marketing organisation may be eligible for part-time working or delivered by on-site or off-site contractors more cost effectively. Are all employees fully employed, or are there tasks that are only justified on reduced hours or part-time working? New opportunities to maximise profitable income may require additional resources in people, skills, knowledge and finance which the organisation may not currently have. Collaboration with a suitable partner may provide a cost effective solution to maximising profitable income while minimising costs and investments.
When assessing the efficiency and effectiveness of marketing, questions should be asked about the marketing function as a whole.
- What are its objectives?
- What are its resources?
- How well is it managed?
- How does the marketing organisation relate to the strategic business plan?
- Do all marketing staff have clear job descriptions, lines of communication, responsibilities.
- Is their time fully employed, or has work expanded to fill the time available and to justify existence?
Marketing mangers have the responsibility of maximising profitable income while minimising costs and the use of assets. It is therefore important in the interests of efficiency that the organisation does not become overstaffed over time, and subject to Parkinson’s law incurring unnecessary cost to the detriment of profitable income.