"Overhead" and Old Corporate Wisdom: What Gets Measured Gets Done

Nancy Lublin from Do Something wrote a great column in this month’s Fast Company on overhead as the bogeyman of the non-profit sector.

She’s right.  There is nothing inherently evil about overhead.  Of course, some types of overhead are wasteful (think: auto execs, private jets, and Obama).  However, other overhead is good and extremely worthwhile. IT spend in a telecommunications company, for example, is not only necessary but can be a source of strategic differentiation if applied appropriately (think: 3G).

My day job is in HR and leadership consulting.  There, we struggle with this issue on a regular basis. While “people are our greatest asset,” they show up in only one place on the financial reports.  That would be under expenses.  So how do we tend to manage people?  That’s right, as liabilities.

The good news is that the earth is moving in HR.  Companies are finding increasingly accurate ways to measure  the productivity and capacity of the workforce as opposed to just payroll expesnse. Let’s hope that we start to see a similar shift in the NGO world.  Because simply viewing overhead as a necessary evil is not only flawed thinking but can severely constrain our organizations in their ability to grow and more effectively serve their constituencies.