How to ensure that headquarters add value

Over the last few years many international corporations have started to restructure their organizations fundamentally by redistributing management tasks and creating small, market-oriented units. However strong the centrifugal forces were, the core task in restructuring these corporations was: how to redesign the corporate centre. The design of the corporate centre is of major importance for the performance of corporations. Corporate Centres can actively improve the performance of their business units, for instance by defining performance targets or by providing shared resources. On the other hand headquarters are frequently accused of being bureaucratic liabilities which make no contribution to corporate success. This problem has grown in recent years as organic growth, internationalization, and an increasing number of mergers and acquisitions have generated new co-ordination problems. These developments have given new priority to the question of corporate centre organization. What is required is the definition of an effective role for the centre and the establishment of central units with efficient scope and size. This article discusses both tasks in the light of current and future requirements for corporate centre organization.