Few Business systems see genuine goal subordination

Today, I opened a systems textbook and noticed the idealistic definition of system where a set of interrelated and interdependent sub systems, work together to achieve a common goal. And perchance if the sub system's individual goal(s) conflict with the overall goal, then the overall goal takes precedence. For instance, if the company's goal is to achieve maximum profitability, then it may conflict with an Operations Goal of 100% stock-in/Sales goal of 100% client coverage/Production goal of 100% capacity utilization. But it is naive to expect the respective functional heads to bend over and take it, just because of an idealistic sense of honour. After all, if their function underperforms, they can kiss their bonuses/promotions good bye, specially in the pay for performance mindset of today. Hence, controls and systems are set in place to ensure that sub units act as per the invisible hand to achieve overall goals. For instance

• Top Down Planning:- This ensures that sub units can only plan and execute within the overall boundaries laid down by management, consistent with superior goals
• Profit Centre and Transfer Pricing:-Profit Centre approach can ensure individual sub unit optimization, but may affect overall margins. That is why transfer pricing sets ground rules and dispute resolution for interactions between units, to ensure that the squabbles do not harm the organization too much.
• Cross Selling:- An acid test of the extent of integration between sub units, is the extent of cross selling done by SBUs. This metric is important especially for banks. Hence, encouraging cross selling will improve peer interaction, and boost overall profitability.
• 360 degree appraisal:- If peers have a role in appraisal, then atleast more civil behaviour and bother for overall goals will ensure.

But the best laid plans often fail. Top down planning without a strong internal audit function, often remains a paper tiger. Transfer pricing can be tweaked by smart management accountants, or rendered useless by faulty data/analysis. And cross selling is not always in the SBUs control, and may lead to misselling/fracturing the primary unit client relationships. These things are a reality of life in organizations, and how they are handled often determines