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O P I N I O N
H ere’s the issue: Department managers, regional managers, and office managers all question the general overhead allocations they are levied at budget time. Nevertheless, whether it’s a function of payroll, labor billings, or gross revenues, the method of the allocation is generally equitable. So what’s the problem? Pay to play For multi-office firms, it’s important to monitor overhead allocations so one region doesn’t consume more than its fair share of resources.
Marc Florian
THE HABITUAL OVER-CONSUMER. If your firm is like most, there is always some office, some department, or some region that seems to use more than what they are paying for – whether it’s collections sup- port, human resources support, or marketing and communications support. With regard to the lat- ter, I’m reminded of a manager who used to tell us we all needed to “swing for the fences” from time to time and stretch our market/geographic bound- aries. But, when your marketing and communica- tions resources are limited, what happens when doing so becomes the norm for one department or region and the burden of others? When does allowing the continued pursuit of such actions ef- fectively amount to a subsidization of one group at the expense of another? What happens when one department or office consumes the value of its overhead allocation and then some? You’re prob- ably thinking nothing.
Actually, something does happen. For every office, department or region that consumes more than their fair share, there is another that receives proportionately less. In most A/E firms, there’s only so much collections, human resources, and marketing support to go around. So, when swinging for the fences becomes the norm for a particular department or region, more times than not, others are left at the bottom of the queue. Understandably, when it comes to overhead, their allocation is effectively their money to use. But, when your allocation becomes their money too, there’s going to be a problem, and that’s exactly what happens when one department or office routinely consumes more than its allocated share. Let’s be clear, swinging for the fences for the sake of a strategic initiative serves a noble purpose –
See MARC FLORIAN, page 12
THE ZWEIG LETTER May 29, 2017, ISSUE 1202
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