Organizing for Efficiency - Rationalizing overhead to reduce administrative costs

Date: 9 September 2016

Venue: UAntwerpen, Stadscampus, Kapel van het Klooster van de Grauwzusters - Lange Sint-Annastraat 7 - 2000 Antwerpen (route: UAntwerpen, Stadscampus)

Time: 4:00 PM

PhD candidate: Jan Boon

Principal investigator: Prof. dr. Koen Verhoest

Co-principal investigator: Prof. dr. Bruno De Borger

Short description: Doctoraatsverdediging Jan Boon - Faculteit Sociale Wetenschappen


Since the onset of the global financial crisis, political executives across the world have engaged in bureaucratic restructuring in order to achieve budgetary cost reductions. A common theme of such restructuring has been to rationalize organizational overhead. Organizational overhead refers to the expenditures that organizations invest in a variety of overhead functions aimed at supporting employees in the primary process. Overhead functions can relate to a large number of tasks, ranging from an IT helpdesk, to cleaning and maintenance, to accounting, to payroll administration, to recruitment, to legal advice, to software development, and so forth.

This dissertation refers to rationalization in the managerial definition of the term, which is to find ways to organize overhead functions more efficiently so that less time, effort and money is spent on them. Yet ‘rationalization’ also has a connotation of applying principles of rational-scientific management to a situation [that was organized irrationally in the past]. Indeed many governments seem to have taken the route towards a more streamlined and frontline-oriented government less burdened by overhead. As a result, organizational overhead is often perceived as something negative that needs to be reduced as much as possible. Yet such a view conflicts with studies showing that organizations require a sufficient overhead capacity to perform, and that this capacity is contingent on a set of organizational and environmental characteristics. Furthermore, several ongoing reforms aim to re-centralize previously fragmented and duplicated overhead processes as a means to achieve economies of scale and scope. Yet this emphasis on re-centralization and the re-introduction of more hierarchical relationships between organizations and central government during periods of fiscal stress might conflict with existing models and logics of production at the level of line organizations.

This dissertation provides a scientific contribution to current debates on rationalizing overhead. Research questions are clustered around three themes. The first theme analyzes differences in expenditures on organizational overhead between public organizations. When policies are adopted that seek to rationalize the overhead of central government organizations, it is important to understand why some of these organizations invest more in overhead than others. The second theme analyzes differences in the models that are used to organize overhead functions. Despite the ongoing crisis climate which urges public organizations to rationalize their overhead functions and to focus their resources on core tasks, little is known about why organizations engage in different organizational models for achieving the required efficiencies. The third theme focuses on the implementation and governance of a particular organizational model that has become an immensely popular vehicle to achieve overhead efficiencies: the Shared Service Center (SSC) model. Despite their popularity and the challenges that come with their implementation, public administration research on SSCs is still lacking. In particular, the body of theory-informed, explanatory studies that shed light on the role of public organizations that are pressured to engage in an SSC reform, and how the relations between SSCs and their customers are governed, is underdeveloped.

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