Citicorp’s Waste

A persistent mistake is also evident in the way Citicorp regularly changes its regional organizational structure (Abrahamson, 2000). In recent years it has alternated between combining sales and operations, and keeping them separate. When they realize that sales is not getting the attention it needs in the highly competitive financial services industry, they separate them once again. The waste of resources has been colossal.

Elsewhere, there is a large insurance group that is a good example of a similar case of forgetting as a result of downsizing (The Economist, 1996). Having slimmed its claims department, it found it was settling big claims too swiftly and too generously. It discovered it had laid off several long-term employees who had created an informal, but highly effective, way to screen claims. It subsequently reinstated them.

A U.S. service company experienced an organizational breakdown after a high level of turnover among frontline employees (Corporate Leadership Council, 1998). The potential revenue at a pharmaceuticals company was jeopardized for the next decade by experience shortfalls in departments across the organization’s entire drug development cycle (Corporate Leadership Council). A senior financial consultant who resigned on a Friday night without notice put at risk 1,000 client relationships with $175 million of assets under management (Corporate Leadership Council). And a high-tech company had to offer a $1 million project completion bonus to a key engineer to prevent delay in a new product launch after a high level of departmental departures (Corporate Leadership Council).