Case Insight #8: When Every Local Decision Makes Sense but the System Still Doesn't Work

Christina Sitaras

Sep 18

4 min read

An organization can make a series of reasonable decisions and still produce an unreasonable outcome.

This becomes particularly visible when business conditions change.

Consider a professional services office facing an unusual combination of circumstances.

Top-line revenue remained relatively close to plan.

On the surface, that suggested the business was performing reasonably well.

But other measures told a very different story.

Utilization was well below expectations.

Revenue per employee was weak.

Project economics were deteriorating.

A growing number of employees did not have enough work.

The organization did not have one performance problem. It had several organizational realities colliding at once.

Revenue Was Only One Part of the Story

The original business plan had assumed a particular volume and value of work. Some expected contracts did not materialize. Others were awarded at lower values than anticipated. The organization therefore achieved something close to its revenue expectations without generating the volume and mix of work required to support the workforce it had planned around.

This distinction matters.

Revenue can reach plan while the operating conditions assumed by that plan do not.

The topline number was not wrong.

It was simply insufficient to explain what was happening underneath it.

An Expected Release Valve Disappeared

Workforce plans also contain assumptions. One of them is often attrition.

In this case, historical experience suggested that a predictable number of employees would leave the organization naturally each year.

That year, they did not.

Ordinarily, natural attrition would have gradually reduced capacity as demand changed.

Instead, headcount remained relatively stable while available work declined. A workforce that had been reasonable under one set of assumptions became oversized under another.

Again, nobody necessarily made a bad decision.

An assumption simply stopped behaving as expected.

Protecting Employment Created Another Experience

The organization also had a longstanding philosophy of treating involuntary termination as a last resort.

Employees struggling in one area were often coached, redeployed, transferred, or given opportunities elsewhere before termination was seriously considered.

There was considerable value in that philosophy.

But under conditions of sustained excess capacity, it created a difficult question.

If there was not enough desirable local work for everyone, what did preserving employment actually mean for the people being preserved?

The strongest performers continued to receive the most important work.

Others spent increasing amounts of time waiting.

Some were assigned work outside their normal market.

Some travelled.

Some accepted assignments that would not ordinarily have been their preferred work.

The organization could legitimately say it was protecting jobs.

Employees could simultaneously experience uncertainty about their place within the organization.

Both things could be true.

The relevant question therefore became broader than whether jobs had been preserved:

What employee experience were the organization's choices collectively creating?

Solving Utilization Could Worsen Economics

Workforce planning offered another apparently rational response.

If local work was insufficient, available employees could be deployed to projects elsewhere in the organization.

That helped people remain productive.

It improved utilization.

It gave employees work rather than leaving them on the bench.

But the solution introduced its own consequences.

Travel and deployment costs could reduce the economics of the work.

The rates available through internal staffing arrangements might not compensate for the additional costs required to make the assignment possible.

An intervention designed to improve one performance measure could therefore worsen another.

The organization had not solved the problem.

It had changed where the problem appeared.

Every Lens Suggested a Different Intervention

Viewed through a utilization lens, the organization needed to find people more work.

Viewed through a financial lens, it needed to reduce the cost of excess capacity.

Viewed through a commercial lens, it needed additional or more profitable sales.

Viewed through a delivery lens, concentrating important work among the strongest performers reduced execution risk.

Viewed through a workforce-planning lens, redeploying available employees made use of otherwise idle capacity.

Viewed through an employee lens, prolonged bench time and less desirable assignments created their own costs.

Viewed through a talent philosophy lens, avoiding premature termination preserved an organizational value that had historically mattered.

Each lens revealed something true.

None, on its own, described the whole problem.

Local Rationality Can Produce Systemic Tension

This is where organizational problems become difficult.

The sales team can make rational decisions.

Project leaders can make rational staffing choices.

Workforce planners can make rational deployment decisions.

HR can act consistently with the organization's employment philosophy.

Finance can protect project economics.

Employees can make rational choices about the assignments they accept.

Yet the interaction of those choices can still produce an outcome nobody wants.

The challenge is therefore not necessarily identifying which function made the wrong decision. It is understanding how decisions that make sense within individual parts of the organization interact across the whole.

The Symptom You Choose Changes the Solution You See

If the situation is defined as a utilization problem, the solution is to find more work for available people.

If it is defined as a headcount problem, reducing capacity becomes more attractive.

If it is defined as a sales problem, attention moves toward pipeline and demand.

If it is defined as a performance problem, the conversation shifts toward talent differentiation.

If it is defined as an employee-experience problem, the meaning of prolonged bench time and redeployment becomes more important.

But the situation contained elements of all of them.

Choosing one definition too quickly would have made the other consequences easier to ignore.

That does not mean every decision requires endless analysis.

Eventually, choices still have to be made.

But the quality of those choices depends partly on whether the organization understands the system it is intervening in.

Closing Reflection

When several organizational measures are deteriorating at the same time, it can be tempting to choose the most visible one and solve for it.

But before doing so, consider:

What does this situation look like from each part of the organization involved? Which decisions are locally rational but collectively creating tension? If we improve one measure, what might become worse somewhere else?

And perhaps most importantly:

Are we solving the problem - or moving it to another part of the system?