Most of us have seen this happening. Costs of Goods and Services Sold (COGS) are steadily decreasing over time. Roughly from 70+% to 50+%. During the same time Selling, General and Administrative Spending (SG&A) have been on the rise (from less than 10% to 20+%). These changes in the modern workforce highlight the rising share of the knowledge workers.
In our “war for talent” times companies do their utmost to recruit the best and the brightest during the good times… However, during times of economic crisis this growing group of knowledge workers is purged much in line with traditional factory management habits. This cycle of bringing and purging knowledge workers of our decision factory is a rather expensive and destructive habit.
Roger Martin writes about this Binge-and-Purge Cycle and argues companies need to change the way they structure a knowledge workforce and move away from management as if these knowledge workers are involved in manual labor. It is this type of thinking which leads to conceptualising the knowledge workers’ job as a daily ongoing collection of tasks. Martin indicates this type of management has several unintended side-effects such as knowledge workers “creating” work to look busy in times there are no daily tasks and knowledge hoarding to protect their positions.
Instead, knowledge workers need to be organised around projects instead of jobs (in line with best practice of professional services companies) and move towards developing knowledge algorithms codifying and transferring knowledge.
As a knowledge worker, do you recognise these issues Martin is raising? How are you dealing with these?