A strategic approach to overhead management

Abstract

Purpose of this paper

The average company spends 23 cents out of every dollar of revenue on overhead, yet most firms lack a plan or system for aligning the with their strategic goals. This paper aims to look at a strategic approach to overhead management.

Design/methodology/approach

The paper reframes how overhead can be categorized and assessed.

Findings

The paper finds that viewing overhead as an investment in a capability is the key to preventing wasteful stop‐and‐start cost‐cutting initiatives.

Practical implications

The paper presents a way to protect the critical capabilities of organizations that are likely to be at risk during cost‐cutting initiatives.

Originality/value

The paper offers a new framework for classifying what is spent on overhead and for evaluating the strategic logic of it, so that management can instill a new discipline to managing overhead.

Citation

Lee, J. and Covell, M. (2008), "A strategic approach to overhead management", Strategy & Leadership, Vol. 36 No. 2, pp. 40-46. https://doi.org/10.1108/10878570810858202