G&A Cost Management, Reimagined
The nature of overhead costs has changed markedly in recent years, demanding a rethinking of how they're understood and managed.
A shift in recent years in the kinds of overhead costs companies are incurring demands a reconsideration of the way such costs are understood and managed, according to the latest work from finance research and advisory firm CEB.
Traditionally, companies incurred general and administrative (G&A) costs for what might be called “rules-based” work, or transactional activities like accounts payable, payroll and the IT help desk, and calendar-centric ones like budgeting and workforce planning. Those are still present, of course, but according to quantitative and qualitative research performed this year by CEB, they comprise only 49% of G&A costs for a typical large company.
The larger, 51% share of overhead spend is for “judgment-based” work, including ad-hoc activities like analytics and non-standard reporting and initiative-based efforts like systems integration and new-product feasibility studies, CEB says.
CEB’s research consisted of a quantitative survey of 100 companies about their overhead spend and practices, and qualitative interviews with 102 senior finance executives (about 60 companies were represented in both groups). read more on CFO.