Reduce expense claims: let your people decide what to spend
In his excellent book “Becoming a Better Boss“, Julian Birkinshaw describes a very interesting experiment at the pharma multi-national Roche. Two groups of staff, in Germany and Switzerland, were told that their travel claims were to become self-authorised.
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Instead of being approved in advance and signed off afterwards, each employee would decide for themselves what was needed (though still aware of company policy). Instead of being checked, the resulting expenses would be displayed on the intranet.
Julian describes the results as “astonishing”: 45% of participants said their motivation had increased from being trusted in this way (against 6% feeling uncomfortable with the approach), and 3 in 4 said it was more efficient and took less time.
Cut the approval, Increase the trust, Get the benefit
It is clear that this change cut a lot of the paperwork and the unnecessary approval that is so common in large organisations. But what happened to the level of expenses? The team had expected them to go up but found that the reverse happened and, in one of the two groups, the cost went down substantially. When people were trusted, they took more responsibility and spent less. As one said “I hope my expenses will motivate others to spend as little as I do”!
This reminds me of when I read Bill Gates’ The Road Ahead’ almost 20 years ago. I still remember being shocked to find that part of Bill’s time was spent checking the expenses for Steve Ballmer to ensure they fell within company policy. As well as being a Microsoft Director, Ballmer owned – even then – several billion dollars of Microsoft shares and could be felt worthy of a bit of slack. I also did wonder if it was the best use of Gates’ time. (Bill told the story not to explain how he suddenly decided to start trusting Steve but instead how they’d solved it by creating a piece of software that would check the expenses automatically.)
The Roche example is one of several stories in the book, that show how you don’t need to be at the top of an organisation to improve things there. Julian argues that, if you have a clear idea and move quickly, in small steps, you can – even within a bureaucratic organisation – enable change and increase trust for those you work with.
Though the biggest surprise was his explanation of how the original meaning of bureaucracy was positive. It was popularised by the German sociologist Max Weber as a system of rules and procedures to get away from domination of what had always been done or the personality of one leader. And for much of the 20th century it was quite an effective way of organising production. Fascinating stuff and well worth a read.
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