Organizational Obesity

Definition

A structural pathology characterized by excessive organizational mass relative to productive capacity. Manifests as overstaffing, redundant processes, unnecessary management layers, and resource inefficiency that impedes organizational agility and threatens long-term health.

Diagnostic Criteria

1. Revenue per employee significantly below industry benchmarks
2. Management layers exceeding functional necessity (>7 levels)
3. Redundant functions and processes documented across units
4. Administrative costs disproportionate to operational costs
5. Decision-making pathways unnecessarily complex

Symptoms

• Slow decision-making (weeks for routine decisions)
• Coordination overhead consuming significant resources
• Innovation suppression (too many approval layers)
• Cost structure inflexibility
• Internal competition for resources rather than external competition

Disease Stages

Typical Course

Develops gradually during growth phases. Often masked by revenue growth. Becomes acute during market downturns or competitive pressure when costs cannot flex. Chronic without disciplined intervention.

Etiology

Results from empire-building incentives, defensive hiring, failure to prune during growth, and metric systems that reward headcount and budget size. Growth adds organizational mass without removing obsolete elements.

Risk Factors

• Rapid revenue growth periods
• Empire-building management incentives
• Weak cost discipline culture
• Complex organizational matrix structures
• Success masking underlying inefficiency
• Difficulty firing or restructuring

Differential Diagnosis

Conditions that may present similarly or co-occur:

Prognosis

Treatable with committed leadership and clear metrics. Restructuring painful but effective if comprehensive. Untreated, leads to competitive failure or acquisition by leaner competitors.

References