As a consultant for large corporations my startup is considering recommending the following:
Imagine that you have a large business with several thousand employees. Usually such a business has budgets for each department and may or may not be split up into strategic business units.
Imagine that the upper management set a value (in money) on the services that each team delivered. Say for example the cantine (which offers food for free as is often the case in Denmark). The cantine would be obligated to make surveys of the employees and make the employees rate the food. Lets say that the food is currently rated at three stars. The upper management could then decide that increasing the rating to four stars is worth 2$ per meal to the company (due to employee satisfaction etc.). This means that if the manager for the cantine believes that he/she can achieve this rise in ratings, he automatically has a budget of 2$ extra per meal. He/she does not need to ask the upper management for approval for using this money, even if it is not in his/her budget. If he/she delivers the increase for just 1.8$ extra, then this is very good, if he/she spends more than 2$, then this is bad.
The idea is to do this for most teams in a whole organization. The purpose of this is to enable lower management to act in a way that is the best for the company without asking for approval all the time.
My question: Could this method work? Do you know any examples of such a thing. I believe that profit centers are not an appropriate description of this.
This sounds great, but is actually pretty confused.
Let's tease out the elements of intention.
Subjective measures are famously unreliable. So the first objective is good: we need to find best practice for conducting such ongoing measurement, implement it and watch the results. But we will be cautious: the accuracy of measurement is probably going to be low.
The second is also good, though structurally problematic. The figure of $2 per portion is plucked from the air, and encodes an assumption that conveys a signal - spend more on ingredients. And spending more would be a failure; failing to move the needle enough (or at all) would be a failure.
This is in fact exactly the old-fashioned kind of 'intervention from on high' that you are trying to avoid. I'm a general manager. I hear that people don't like the canteen food. 'Buy better ingredients, up to $2 per portion' is my decree. Yours might have been, "build the canteen staff as a team and encourage them to be more welcoming - you can spend $500 per team member each year." Sally would have commanded a canteen refit, a $200,000 capital expense. Jim would have hired a new chef, adding $40,000 to the operating budget. Jo would have negotiated a master catering supplier contract, with a 10% quarterly bonus based on satisfaction. Any or all of these might help, one might be the optimum answer, but they are nevertheless random acts of management.
The third, I suspect, is the vision you're pursuing. Staff empowerment is a major (and valuable!) change. If you choose to go about this team by team, by definition you should begin by consulting the people you mean to empower and engaging the managers who have to date measured their significance by the size of their budget and the scope of decisions they are authorised to make.