Warning: Are you suffering from this syndrome that kills businesses?

ILLUSTRATION BY RUTH MACAPAGAL

In some countries and regions —Asia is one of them—a syndrome festers in corporations and organizations. I call that the “kingdom syndrome.” It usually befalls business leaders of all kinds. It is generally worse the higher up a business leader is, but my team and I have seen it happen equally in middle management.

Kingdom or good delegation?

The kingdom syndrome, put in simple terms, states that the higher my rank or status, and the better my position, the more underlings and minions I need around me to show my value and worth.

Business leaders often do this to show their status and prestige, which gives this syndrome its name. In our experience, this is most common in regions such as the Middle East, Asia and countries like India.

Don’t get me wrong; much is to be said in favor of good delegation. A business leader or owner must delegate anything and everything that can be done by others. We are talking here about artificially inflating a business. Most businesses I have seen, from family business conglomerates to Fortune 500 companies, are inflated.

Think of it like this: If you want to run a marathon, you better look like the world’s best marathon runners. If you have never seen any, google them. They look like lean and mean running machines. A business needs to be the same: no excess fat.

What happens when you violate that rule?

When Elon Musk gutted Twitter, now called “X” in 2023, he threw out all but around 20 percent of employees. Now, this is his method of madness. He fires 80 percent and then begins to rehire new talent. I do not recommend you do the same.

But the lesson is still essential: Most companies I have seen during my entire career could be run more efficiently, cost-effectively and profitably with at least a third fewer employees, in some cases even up to 50 percent fewer.

Why is that? Let’s go back to the marathon example. Your speed decreases exponentially with any additional gram of fat you carry. It does not slow you down incrementally; it compounds. In an organization, this is the same: The more you inflate it with too many people, the more its overall speed, agility, execution, productivity and profitability go down. Most business leaders need to realize this. They think more overstaffing will not hurt. It does.

Cut the fat!-The inconsistency avoidance principle

The owners of an Asian conglomerate approached my team with the request to make one of their core businesses profitable again. After our deep dive, it became clear that they still had the same number of people on payroll as they did in their heyday when profits were sky-high.

Everybody had gotten so used to being comfortable and having many minions around that no one questioned the sanity of this approach. We analyzed that they could deliver the same output with one-third of their staff. Obviously, they would become a lot more profitable if they did so.

Here, two powerful principles were at work: the inconsistency avoidance principle and the kingdom syndrome. I have such a position, so I need a certain amount of people around me doing stuff for me. I once witnessed a young eight-year-old healthy kid who lived at a luxury residential condominium in Asia go to the pool with three nannies, each carrying a towel. If you grow up like that, your life in terms of productivity, self-reliance, drive and grit is already over.

Unfortunately, business leaders and CEOs in many countries succumb to that syndrome, which hurts their businesses.

The double-edged sword of delegation and overstaffing in leadership

In modern business, two prevalent issues can derail even the most promising organizations: excessive delegation by leaders and organizational overstaffing. While both strategies stem from attempts to optimize operations and scale growth, they often lead to unintended consequences that can stagnate or reverse progress. This article delves into these pitfalls, providing insights and practical examples to guide CEOs and business owners in navigating these complex challenges.

The dangers of being too hands-off

Delegation is a crucial skill for any leader. It allows for the distribution of tasks among team members to ensure that the leader can focus on strategic decisions. However, an overly hands-off approach can create a leadership vacuum where strategic oversight and mentorship are lacking, leading to misaligned objectives and underperformance.

To promote autonomy and innovation, the CEO of a burgeoning tech startup refrained from direct involvement in the development team’s daily operations. Over time, the lack of clear direction and feedback led to a fragmented team effort, with multiple projects missing key market trends and failing to meet customer needs.

The perils of overstaffing

On the other end of the spectrum lies the danger of overstaffing—an organization’s attempt to quickly prepare for growth and scale operations by hiring more employees than needed. This approach often leads to redundancy, inefficiency and a bloated payroll that can drain an organization’s resources.

A practical example of this can be seen in the story of a retail giant that, anticipating a massive surge in online sales, hired an excess of staff across its logistics, customer service and IT departments. The expected sales boom did not materialize as predicted, leaving the company with a workforce far more significant than necessary. The overhead costs soared and the company struggled to find productive use for all its employees, leading to widespread job dissatisfaction and eventual layoffs, damaging its reputation and morale.

Balancing act: Finding the middle ground

The key for business leaders lies in balancing effective delegation and maintaining an optimal workforce size. This involves establishing clear communication channels, setting precise goals and actively engaging with teams to ensure alignment with the organization’s vision. Regular reviews and adjustments based on performance metrics and market demands can help maintain this balance.

Practical steps

1. Strategic delegation:

• Implement a system of regular check-ins with team leads to stay informed and provide strategic guidance.

• Use delegation as a tool for employee development, matching tasks with employees’ skills and career aspirations.

2. Optimizing workforce size:

• Conduct regular assessments of productivity and workload to identify staffing needs accurately.

• Consider flexible staffing models, such as contingent workers or freelancers, to manage fluctuating demand without committing to long-term overhead.

3. Use the blank-page approach

We use this approach with our clients. We look at a blank page and ask ourselves: What would the structure and staffing of this company look like if we were to redesign it from scratch today? What would be the most efficient way to do things versus the “this is how we have always done it” approach? INQ

Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email [email protected].