The hidden costs of cutting your admin staff

Over the years, most companies have cut administrative staffs, but any savings are overtaken by long term costs and lost potential.

Finance, as a business function, used to have a seat at the executive table along with human resources, marketing, sales, strategy development, and operations; now finance is the table.

Numerous effects of finance’s dominance is evident today in what some call the “finalization of business.”

Visible signs of this phenomenon are reduced employee training, smaller formal education reimbursement allowances, fewer company-paid professional certifications, smaller employee bonus programs, smaller marketing expenditures including less collateral, less employee travel and less research and development investment.

You get the idea.

One item of note is the virtual disappearance of secretaries and administrative support personnel from our industry.

At many levels throughout companies today, managers are expected to type their own letters, print them, make their own copies, send faxes, file hardcopy documents when needed for future access, make their own travel reservations, complete and submit their own expense reports, schedule meetings and make various kinds of reservations. These administrative activities have become routine to most people.  However, let us consider its negative impact of the company’s bottom line.

Early in my career, I was explicitly told to not perform these administrative tasks.  My management made it clear to me that someone else, paid less than I, would perform these duties faster and cheaper than I ever would.  I was being paid by the company to be in front of customers closing deals and securing revenue for the company.  This was why I was hired in the first place.

Interestingly top management still has their administrative support staff.  I assume their productivity is valued more by the company than the other highly-paid managers.

Years ago, Harvard Business Review had an article concerning this very subject.  The article discussed how the reduction of administrative support personnel cost companies more money than they were saving when companies got rid of these people.  I am not suggesting that each manager have their own administrative person; these valuable resources can certainly be shared.

The vast majority of the administrative people I worked with over the years would perform their job well and then move on career-wise after a few years to more challenging and financially rewarding work. Many people took the time to learn the company’s business, develop their professional network, and then select a career path of interest to them.  Some people chose proposal support work that eventually led to a proposal or capture management position years later; some chose AR/AP work that later led to a more challenging position in finance; some chose an operations support role eventually becoming project managers; some chose marketing coordination jobs supporting marketing projects and years later became marketing managers or sales people; some helped with recruiting tasks and later moved into senior HR roles, and so on.

The company in effect had been maintaining a pool of dedicated and motivated employees that served as an employment pipeline that provided ready staffing as the company grew internally. 

But for many young people today this career path is gone.  This is the unfortunate result of saving pennies versus tapping into a well of dedicated employees and investing for growth.

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