Corporate Headquarters 2010 (PDF, 3456 KB) - Roland Berger

CORPORATE HEADQUARTERS 2010 

Study results: Corporate headquarters are getting 

bigger and manage increasingly complex systems 

Munich, September 2010

Source: Roland Berger 

2 

Management summary (1/2) 

72 companies participated in the 5th Corporate Headquarters study – more international 

participants than ever before 

Continuous trend toward centralization since 2005 – companies are responding to 

increased complexity and cost pressure with further centralization: certain traditional central 

functions have expanded greatly since 2005 

Shared services and outsourcing remain important tools for providing services 

efficiently – outsourcing has declined slightly overall, but certain functions use outsourcing 

more than ever 

A certain discrepancy exists between the management concept claimed by companies 

and the actual approach practiced. Key questions concern the role of corporate 

headquarters and the added value it offers 

Modern corporate headquarters are responding to the question of what role they play and 

what value they add by coming up with new approaches for dealing with growing 

complexity


3 

Management summary (2/2) 

Five approaches to designing modern corporate headquarters 

1. Provide expert knowledge, e.g. through Centers of Excellence 

2. Manage services, e.g. through shared services and outsourcing 

3. Form strong entities, e.g. a corporate office 

4. Work in networks, e.g. in project teams 

5. Create a sense of identity, e.g. in terms of joint values 

In doing so, modern corporate headquarters speed up decision-making and 

implementation processes, simplify structures, encourage creativity and promote 

cooperation through individual incentives

4 

CONTENTS 

PAGE 

A. 

B. 

Corporate headquarters – Can they live up 

to expectations? 

Modern corporate headquarters – 

Lessons learned 

5 

11 

C. Detailed study results 

35 

D. Contacts and exclusive workshop offer 51 

Appendix 1 – Study participants and design 59 

Appendix 2 – Study results: Statistics 66

5 

A. 

Corporate headquarters – Can they live up to 

expectations?


6 

Corporate Headquarters is a important topic as meaning and number of 

critical issues increase 

Corporate Headquarters manage increasingly complex issues 

CORPORATE SECURITY/FRAUD 

CAPITAL MARKET SENTIMENT 

WORKS COUNCIL 

THE PUBLIC 

SHAREHOLDERS 

TARGETS/BUDGETS 

M&A ACTIVITIES 

TRANSPARENCY 

EXECUTIVE PORTFOLIO 

COSTS/EFFICIENCY 

CORPORATE GOVERNANCE 

HQ'S VALUE ADDED 

BORROWING/DISTRIBUTING FUNDS 

DECISIONS MAKING PROCESSES 

LEGAL OBLIGATIONS 

STRATEGY 

ORGANIZATIONAL RESPONSIBILITY 

CORPORATE RESPONSIBILITY


7 

The corporate center's management style and expectations towards 

central management – Focus on corporate headquarters 

THE 

CORPORATE HEADQUARTERS 

1 

2 

3 

… is an expression of the way a 

company views its management style – 

inside and outside the company 

… constantly has to justify its existence 

vis-à-vis its operational units and the 

capital market 

… needs to react to global developments 

and is therefore under constant pressure 

to change

Source: Richardson, H.A. et al: Does Decentralization make a difference for the Organization?; Journal of Management, 2002; Roland Berger 

8 

1 

The corporate headquarters is the face of the company and the expression 

of its fundamental management style 

Management style of corporate headquarters 

"CENTRALISM PURE" 

HIGH 

> Degree of involvement 

> Share of resources 

> Decision-making authority 

"TOTAL FREEDOM" 

LOW 

The management style determines the basic 

management concept 

> Integrated headquarters 

> Operational holding organization 

> Strategic and financial holding organization 

Derives the roles of the central functions, e.g. as 

> Law guardian (governance/legal matters) 

> Manager (management/control, strategy/resources) 

> Business partner (advice, expertise/innovation) 

> Service provider (services, focus on efficiency) 

Complete autocracy of 

corporate 

headquarters 

Maximum selfdetermination, 

delegation 

of decision-making 

authority 

Determines the allocation of decision-making 

authority 

> Vertical: Headquarters – Division 

> Horizontal: Division – Division

Source: Ambos/Mahnke: How do MNC Headquarters add value?, Journal of International Business 04/2010; Roland Berger 

9 

2 

Corporate headquarters need to justify their existence to operational units 

and the capital market – The value it adds is not always perceived 

INTERNAL Corporate HQ's added value not always 

perceived by the OPERATIONAL UNITS 

Corporate HQ's perceived added value 

Improves information flow 

Challenges subsidiary to improve 

Provides useful guidance and advice 

Substantial cost savings 

Knowledgeable about the local environment 

Fast and efficient decision making 

Provides relieve from admin. work 

Scale: 5 = Agree strongly; 1 = Disagree strongly 

1 2 3 4 5 

EXTERNAL Corporate HQ's added value not 

perceived by the CAPITAL MARKET 

Sample sum-of-the-parts evaluation (sop) 

BU 1 

BU 2 

BU 3 

BU 4 

Up to 

10% 

Holding 

discount 

Market 

value 

> Business Unit (BU) managers do not perceive all of the 

value the corporate headquarters adds 

> The biggest complaints are about bureaucracy and 

decision making 

> Better access to resources through corporate HQ (e.g. 

financing) apparently not an issue/not examined 

> Discount for corporate headquarters in sop evaluation 

> The value added by the corporate headquarters is not 

seen or is even viewed negatively by the capital market 

> The holding discount must be distinguished from the 

concept of conglomerate discount for diversified 

conglomerates


10 

3 

The global megatrends are on everybody's lips – For corporate 

headquarters this means a need for constant change 

Increasing 

volatility of 

markets 

Emerging 

markets and 

shifting 

economic 

centers 

Sustainability 

and social 

responsibility 

Globalization & 

internationalization 

CORPORATE 

HEADQUARTERS 

Knowledge and 

service society 

Demographic 

change 

New 

information and 

communication 

technologies 

Increasing 

regulation 

Higher 

governance 

requirements 

> The demands on corporate headquarters 

are changing and necessitate structural 

adjustments 

> The traditional approach in organizational 

development – "unfreeze-move-refreeze" 

– does not take sufficient account of the 

increased dynamism 

> The corporate headquarters is constantly 

redefining itself and is turning into a 

company's supreme project and change 

manager

11 

B. 

Modern corporate headquarters – 

Lessons learned

Lessons learned: Five approaches for designing modern corporate 

headquarters – Responding to the increasing complexity 

INCREASING 

COMPLEXITY 

> Globalization & 

internationalization 

> New information/ 

communication media 

> Increasing volatility of 

markets 

> Knowledge and service 

society 

> Shifting economic 

centers 

> Increaing regulation 

> Higher governance 

requriements 

KEY QUESTIONS FOR 

CORPORATE HQ 

> Does it generate a parenting 

advantage? 1) 

> Does it comply with legal 

requirements? 

> How does it deal with 

regulation? 

> How does it enforce 

corporate governance? 

> Does it identify innovation 

and strategic options? 

> How does it allocate 

resources most effectively? 

> Does it safeguard corporate 

unity? 

1 

2 

3 

4 

5 

Provide EXPERT 

KNOWLEDGE 

Manage 

SERVICES 

Form 

STRONG ENTITIES 

Work 

IN NETWORKS 

Create a sense of 

IDENTITY 

1) The parenting advantage is the value contribution made by a corporate HQ or group versus organizing and managing parts of the company independently (cf. Campbell et al. 1995) 


12


13 

1 

PROVIDE EXPERT KNOWLEDGE 

Corporate headquarters provide expert knowledge – Bundling knowledge 

by cooperating with local subject matter experts 

Division 1 

CoE 

BU 1 BU 2 BU 3 

CORPORATE 

HEADQUARTERS 

CoE CoE CoE 

CoP 

22 

Division 2 

BU 1 BU 2 BU BU 

3 

3 

> The global information flow calls for the 

bundling and provision of relevant 

knowledge 

> Centers of Excellence identify 

company-wide best practice and 

share insights with external experts, 

e.g. academia 

> Internal knowledge sharing takes place 

through Communities of Practice 

with the aim of integrating local 

knowledge and requirements 

Affiliate 

1 

Affiliate 

2 

CoE: Center of Excellence 

-ort 3 

Affiliate 

3 

Local subject matter experts 

CoP: Community of Practice 

BU: Business Unit 

> Corporate headquarters creates 

added value by making the 

knowledge available and deriving 

overarching standards, processes 

and tools

Source: Roland Berger "Purchasing Excellence Study", 2009 

14 

1 

PROVIDE EXPERT KNOWLEDGE 

Example of higher efficiency throughout the purchasing process by 

making central expertise available – Operational purchasing stays local 

Share of mostly central 

coordination [%] 

Share of operational/strategic 

purchasing [%] 

Employee education level in 

Purchasing [%] 

Centrally 

coordinated 

purchasing/ 

lead buying 

32% 

2003 

55% 

2009 

Strategic 

purchasing 

Operational 

purchasing 

100 

27% 

73% 

2003 

100 

39% 

61% 

2009 

University 

degree 

Technical 

qualifications 

Commercial 

qualifications 

None 

100 

17% 

59% 

10% 

2003 

14% 

100 

25% 

29% 

40% 

6% 

2009 

134 

Purchasing volume 

100 

104 

FTE total in 

purchasing 

48 

Costs as a % of 

procurement volume 

2003 2009 

> Increase in central purchasing with qualified staff 

(experts, lead buyers) 

> Raising the purchasing volume while not raising staff 

numbers – thereby cutting costs in relation to the 

purchasing volume 

> Purchasing as an example of the added value offered 

by central experts; operational purchasing stays local

OUTSOURCING SHARED SERVICE 

CENTER 

CENTRALIZATION 

2 

MANAGE SERVICES 

Corporate headquarters focus on qualitative improvements, managing 

shared services and controlling outsourcing partners 

Roles HQ is expected to assume as service provider – Finance functions 1) 

Higher quality of 

information 

Better provision of 

information 

Reduced 

coordination costs 

Cost cutting 

Economies of scale 

Improved process 

quality 

82% 

78% 

69% 

68% 

62% 

57% 

> Focus on governance and control tasks (Risk, 

Treasury, Reporting, Controlling) 

> Corporate headquarters adds value as an expert 

and by managing internal (shared services) or 

external service providers (outsourcing) 

> Bundling transaction-intensive actions 

> Providing services for corporate divisions – 

including offshore, where applicable 

> Usually assigned to and managed by the 

corporate headquarters 

Reduced headcount 

Cost cutting 

Focus on the core 

business 

43% 

50% 

56% 

> Outsourcing to specialized service providers to 

make fixed costs variable 

> "Bridgehead" function for corporate headquarters 

– Negotiating SLAs 2) with the external partner 

– Controlling service quality and costs 

1) Multiple responses possible 2) Service level agreements 

Source: Horváth & Partner; Roland Berger 

15

2 


Example: Shared services at Bayer – Bundling support services to free 

core areas from the burden of support tasks 

BAYER AG ORGANIZATIONAL STRUCTURE 

Group Executive Board 

Holding 

> Separating support services and 

strategy-oriented group services 

Lines 

of work 

Corporate 

Center 

Shared 

Services 

> Ensuring from the very start that the 

objectives of the Shared Service 

companies would be reconciled with 

the group's overarching objectives 

Bayer 

Healthcare 

Roles 

Bayer 

Crop 

Science 

Bayer 

Material 

Science 

Bayer Business Services 

Bayer Technology Services 

Bayer Industry Services 

Bayer Business Services: Business and administrative services 

Bayer Technology Services: Engineering and technology services 

Bayer Industry Services: Site-based services 

> Coordination through "community 

management", i.e. affected areas work 

under the overall control of a 

Corporate Center 

> Shared Service Centers established as 

a major means of supporting the 

reorganization of the entire group 

Source: N. M. Pérez: Service Center Organisation, 2009; Bayer AG; Roland Berger 

16

Source: Roland Berger Research 

17 

2 


IT outsourcing has been a major trend in recent years – Almost daily press 

coverage … 

Examples of 

typical deals 

Shell: Full outsourcing of data center maintenance to 

T-Systems, deal volume of EUR 1 bn, runtime 5 years 

Bombardier Transportation: Outsourcing of desktop services, 

end-user help desk, network and application mgmt., 

EUR 765 m volume, 7-year runtime 

Sal. Oppenheim: Infrastructure outsourcing (workplace, data 

center, networking and security services) – contract renewal for 5 

years 

CAT Group: Outsourcing of application development services 

(programming, integration, operation, maintenance) for 

7 years 

Zuger Kantonalbank: Outsourcing of SAP application services 

(development, maintenance, support), volume of 

EUR 20 m, runtime 7 years


18 

2 


… but some of the deals in the past did not result in the anticipated 

savings and were terminated 

Examples of 

failed deals 

Deutsche Post World Net: Internal cost structure found optimal 

after preparation – EUR 3 bn deal cancelled before 

implementation started 

Bank of Scotland: Changed requirements 

after strategic review – GBP 700 m contract terminated 

Deutsche Bank: Savings from full outsourcing of data center not 

realizable – EUR 2.5 bn contract terminated 

Dow Chemical: Ongoing losses for provider EDS – contract 

terminated by EDS 

DaimlerChrysler: Implementation of full desktop services 

outsourcing failed – change of providers


19 

2 


Savings through outsourcing are often overestimated – Role of corporate 

headquarters as supervisory body to avoid unpleasant surprises 

The real savings from outsourcing – Illustration 

100% 40% 

IT cost 

before 

optimization 

and outsourcing 

Potential 

from internal 

optimization 

60% 20% 15% 95% 5% 

Internally 

optimized 

IT cost 

Further 

potential 

from outsourcing 

Cost of outsourcing 

(incl. provider's 

margin) 

IT cost 

after outsourcing 

Real value 

created from 

outsourcing 

> Savings potential is often 

overestimated – critical 

evaluation prior to outsourcing 

is essential 

> During cooperation with an 

external service provider, an 

internal "bridgehead 

function" should be 

maintained in the form of a 

central function 

> In this way, the know-how to 

control and manage the 

service provider remains in 

the company even thought the 

service is outsourced


20 

3 

FORM STRONG ENTITIES 

Corporate headquarters are – once again – making use of small, 

centralized units to handle strategic and governance tasks 

CORPORATE OFFICE 

> Helping group management deal 

with complexity 

– Corporate council 

– Management of committees 

– Political engineering 

– Administration of decisionmaking 

processes 

> Managing the strategy and innovation 

process 

– Identifying and evaluating strategic 

development options (e.g. M&A, 

investments, etc.) 

– Supporting the strategic planning 

process 

– Advising management/ 

in-house consulting 

CORPORATE DEVELOPMENT 

CORPORATE COMPLIANCE 

> Enforcing compliance with 

legal regulations and internal 

rules 

– Deriving behavioral 

guidelines on the basis of 

legal regulations 

– Developing tools and control 

mechanisms 

– Providing advice and support 

in compliance-related matters 

> Implementing corporate governance 

requirements in corporate structures 

and processes 

– Refining processes and 

structures 

– Documenting legal 

organization and processes 

– Advising and monitoring the 

business units on corporate 

governance 

CORPORATE ORGANIZATION 

> The departments typically set 

up as staff units are no 

newcomers – however, 

branded as a luxury, they were 

often abolished 

> Numerous companies have 

since reversed this trend and 

are once again investing in 

small, strong units to assist in 

issues of company-wide 

relevance 

> The main focus of the work of 

these units partially overlaps 

or is consolidated in larger 

departments

Source: Energia do Portugal; Roland Berger press research 

21 

3 


Corporate Office: Energia do Portugal example 

Corporate Office of EDP S.A. 

COMPANY SECRETARY'S OFFICE & 

LEGAL ASSISTANCE 

MISSION 

To support the management board in all administrative matters 

to ensure the Corporate Center's ability to respond to relevant 

issues and to provide advice on legal issues to ensure 

compliance with legal rules 

MAIN TASKS 

> Preparing meetings and managing decision processes 

> Communicating decisions of the board 

> Representing the company on behalf of the management 

board 

> Coordinating resource allocation in the Corporate Center 

> Providing general legal advice 

> … 

> EDP's Corporate Office is one of the 

governance support functions in the 

Corporate Center 

> Other governance support functions in 

the Corporate Center 

– Internal Audit 

– Ethics Commissioner 

– Organizational Development 

– Sustainability and Environment 

– Regulation and Competition 

– Risk Management 

> Governance functions ensure that the 

board is able to execute its shareholder 

responsibilities

Source: Roland Berger press research 

22 

3 


Corporate Office: Examples of political engineering units 

Examples of central political engineering units 

Dr. Johannes Teyssen – CEO responsible for Executive HR, Strategy & 

Corporate Development, Investor Relations, Audit, Politics and Communication 

Philip Thomson – Senior Vice President, Global Communications responsible for Media 

Relations, Investor Relations, Corporate Responsibility, Global Community 

Partnerships, Internal Communications and Product Communications 

Simone Mori – Director of Regulatory and Environmental Management 

(part of the corporate functions) 

Dr. Jürgen Hambrecht – Chairman of the Board of Executive Directors responsible for 

Legal, Taxes & Insurance; Strategic Planning & Controlling; Communications & 

Government Relations BASF Group; Global HR – Executive Management & 

Development; Investor Relations; Chief Compliance Officer 

Nene Foxhall – Corporate Officer and Senior Vice President — Communications and 

Government Affairs

Source: Robert Bosch GmbH; Roland Berger press research 

23 

3 


Corporate Compliance: Robert Bosch GmbH example 

Corporate Compliance at Robert Bosch GmbH 

Head of Corporate 

Law 

Compliance 

Committee 

reports to 

Head of Internal 

Auditing 

> Compliance work rests on three pillars 

– Development of globally applicable rules 

("Code of business conduct") 

– Information, seminars/web-based training, 

sensitization and consultation 

– Identifying and punishing incorrect behavior, 

incl. anonymous hotline 

coordinates 

Legal Compliance 

Department 

involves 

> Central Legal Compliance Department reports to 

the Compliance Committee and coordinated global 

compliance matters 

Local Compliance 

Managers 

e.g. legal 

Other 

functions 

> 35 local Compliance Managers implement the 

centrally defined compliance standards across the 

globe

Source: Compliance analysis of potential, IMWF/Steria Mummert (2010); Roland Berger 

24 

BACKUP 

Central compliance units are a response to the increasing regulation and 

complexity of international legal requirements 

Data 

protection 

Avoiding 

industrial 

espionage 

Breach of 

environmental 

regulations 

Gifts and 

entertainment 

Violation of laws 

Fraud/ 

extortion 

Bribery/ 

corruption 

CORPORATE COMPLIANCE 

> Top management responsibility: Compliance 

Officer in top management or the board (as at 

Siemens, ThyssenKrupp, etc.) 

> Allocated resources: Separate corporate entity/ 

function for corporate compliance 

> Interface management: Close coordination/ 

cooperation with Internal Auditing, Legal and 

possibly also Controlling/Finance 

> Global standards: Centrally defined guidelines 

and processes, local implementation

4 

WORK IN NETWORKS 

New IT and communication tools create the prerequisites for working in 

distributed teams – Overcoming organizational boundaries 

> Working in distributed teams puts the 

importance of department boundaries into 

perspective – initiatives and projects replace 

traditional organizational units 

> The management – with support from corporate 

headquarters – often guides the teams via socalled 

strategic initiatives 1) 

> Implementation is generally effected through a 

large number of projects, embedded in an 

overarching program structure 

> A central program management office assumes 

a crucial role 

– Implementation controlling (milestones, 

effects, risks) 

– Best practice sharing/method transfer 

– Reporting on project progress 

1) cf. Schmid/Müller-Stewens/Lechner: Strategic Initiatives as an Instrument for Corporate Management, zfo 02/2009 


25

Source: Organisation 2015 (zfo 05/2009); Roland Berger 

26 

4 


Soft factors are at the top of the agenda for 2015 – Particular focus on 

change and project management 

Top 5 issues in 2015 [% of respondents] 

Change management 

implementation 

Project management 

Leadership 

Cross-departmental cooperation 

Network/virtual organization 

Employee motivation 

Information and knowledge 

management 

Capacity to integrate 

acquisitions 

Configuration of corporate culture 

Performance management 

Avg. for hard factors, primarily 

cost management, restructuring, 

process management 

15 

13 

14 

19 

20 

21 

21 

22 

22 

22 

20 

Avg. for soft 

factors 

26 

> Change and project management 

are gaining importance 

as a means of dealing with the 

constant pressure to change 

> In addition, issues like leadership, 

cross-departmental 

cooperation and virtual 

organization have been 

mentioned as focal topics for 

the next five years 

> Overall, this signifies for 

corporate HQ the need to 

work across the entire 

organization – irrespective of 

hierarchies, structures and 

organizational boundaries

4 


Numerous companies have initiated corporate programs for companywide 

and continuous performance improvement 

SHAPE 2012 

> Increasing efficiency and value by EUR 1.5 bn 

within 3 years through higher productivity and 

cost savings 

TK best 

> Corporate performance program with a focus on 

operational efficiency, reducing financial 

commitments, service orientation, etc. 

Changing Gear 

> Trimming processes and structures, using 

opportunities for profitable growth 

> Increasing earnings per share by 10% p.a. 

Perform to Win 

> Savings of EUR 1.5 bn within 3 years with actions 

in purchasing, sales, IT infrastructure and admin. 

structure 

STAR 

> Efficiency-improvement program to increase 

profitability; mostly by optimizing purchasing and 

distribution networks 

Climb 2011 

> Efficiency program aiming at improving earnings by 

EUR 1 bn by cutting costs and boosting revenues 

through profitable short-term investments 

On Track 

> Portfolio management, administrative 

reorganization and leveraging profit potential; 

target savings of EUR 500 m p.a. through 2012 

One 

> Savings of EUR 1 bn within one year, mostly by 

selling off post offices and the associated reduction 

in headcount 


27


28 

5 

CREATE A SENSE OF IDENTITY 

An overarching corporate culture creates a sense of identity – Embedded 

by centrally managed HR tools deployed throughout the organization 

Culture/values and how they are embedded in the organization through HR tools [number of mentions] 

Results of structured interviews with 11 international 

corporate groups 

HR tools for embedding culture 

> All of the eleven companies surveyed have defined an 

overarching corporate culture or common values 

> The main effects that were mentioned are: 

– Better identification with the company 

– Clear value proposition to all employees 

– Greater employee retention 

– Common objectives 

– Greater mobility between business units and 

countries 

> All benchmark companies embed their corporate culture 

and values in the organization by means of HR tools, 4 Competency 

1 

model 

companies do so in full (= each cultural aspect or each 

value is embedded through HR tools) Other 

4 

N = 11; multiple responses possible 

Performance 

Management 

Leadership Dev. 

Compensation 

Talent Mgmt. 

Employee survey 

Recruiting 

2 

2 

3 

4 

6 

9

FEATURES OF RADICAL UPHEAVALS 

Source: Capitalizing on Complexity, IBM 2010; Roland Berger 

29 

5 

CREATE A SENSE OF IDENTITY 

Radical upheavals create uncertainty among employees and jeopardize 

corporate cohesion – Corporate headquarters create a sense of identity 

[% mentions by 1,500 top managers surveyed] 

Increasing 

volatility 

Greater 

uncertainty 

Rising 

complexity 

Structural 

discontinuity 

69% 

65% 

60% 

53% 21% 

21% 

22% 

18% 

13% 

14% 

18% 

26% 

> Increasing uncertainty among employees 

and managers as a result of the constant 

changes and the unpredictability 

> Corporate headquarters and certain central 

functions can be assigned a strong role as 

creators of a sense of identity in this 

context 

> The focus lies on a strong corporate culture 

that is embedded in a set of overarching 

values 

> These values are brought to life especially 

through the deployment of various HR and 

staff development instruments, e.g. 

performance management, training 

programs, competency models, etc. 

Agree strongly Agree in part Agree somewhat

RESPONSES TO INCREASING 

COMPLEXITY 

Summary: Complexity is the biggest challenge facing management – 

Corporate headquarters play a key role in overcoming this complexity 

1 

2 

3 

4 

5 

Provide EXPERT 

KNOWLEDGE 

Manage 

SERVICES 

Form STRONG 

ENTITIES 

Work IN 

NETWORKS 

Create a sense of 

IDENTITY 

> Complexity is the greatest challenge facing 

management and its extension – corporate 

headquarters 

> Centralization – i.e. smart management by 

corporate headquarters – is an effective way to 

overcome this complexity 

> Key factors include 

– Speed of decision-making and implementation 

– Simplicity and transparency of structures and 

processes 

– Room for creativity and entrepreneurship 

– Cooperation based on shared values and 

individual incentives 


30

Source:Roland Berger 

31 

Outlook: Three aspects define the future corporate headquarters from 

Roland Berger's perspective 

1 

CENTRAL 

CONTROL, DECENTRALIZED MANAGEMENT 

Putting into perspective the divide between centralization and decentralization – specific 

focus on the degree of centralization per function 

2 

SHIFT 

IN THE CENTER OF GRAVITY 

Breakup of traditional location paradigms and shifting of value creation by the 

headquarters in line with a company's global footprint 

3 

PROJECT 

AND PROCESS ORIENTATION 

Project business becomes day-to-day business – traditional organizational structure 

supplemented by virtual forms of organization


32 

1 

The question of centralization or decentralization needs to be clarified for 

individual functions – Dynamic perspective 

Roland Berger profiling matrix – To be used for individual functions 

Category Criterion Core question 

Centralization 

Indication/answer 

leans toward … 

Decentralization 

Information 

Customer 

segmentation 

Regional 

segmentation 

Access 

Durability 

> Should radically different customer profiles 

(internal/external) be taken into account? 

> Should differences between regional markets be 

considered (culture, infrastructure, politics, etc.)? 

> How easily could relevant information be 

gathered? 

> How fast does the information base change (needs, 

conditions, etc.)? 

Homogenous target 

group 

Homogenous target 

market 

Complete transp., can be 

communicated, storable 

Constant, clear 

symptoms 

1 

2 

3 

4 

Heterogeneous target 

group 

Heterogeneous target 

market 

No transparency, implicit 

knowledge 

Highly dynamic, 

unpredictable 

Incentives 

Attribution 

Planned interval 

> How precisely can a result be attributed to a single 

entity (employee, department)? 

> How long before a result is visible? 

No attribution possible 

Long-term (at least 2 

business years) 

5 

6 

Completely and clearly 

attributable 

Short-term (< one fiscal 

year) 

Tasks 

Standardization 

> Can the same standards be applied to 

tasks/processes (scope, quality, sequence, etc.)? 

Can be completely 

standardized 

7 

Mostly individual cases 

Synergies 

> Can synergies be achieved by bundling? 

High synergy effect 

8 

No synergies 

Competition 

Differentiating 

feature 

> Do competitive activities focus more on cost or 

innovation? 

Absolute price 

competition, very high 

cost pressure 

9 

Innovations, low cost 

pressure


33 

2 

The economic centers of gravity will continue to shift over the next decade 

– The physical headquarters will dissolve 

Shift in economic centers of gravity 

GLOBAL FOOTPRINT 

> Research & development 

> Sourcing/partners 

> Supply chain mgt. 

> Production 

> Sales/CRM 

> Administration 

> Corporate headquarters 

> etc. 

CRITERIA 

> Value creation/service/ 

cost 

> Headcount 

> Investments/assets 

> Customers 

> etc. 

Distribution of mkt. capitalization 2010-2040 [USD bn] 

80 

60 

40 

20 

0 

2010 

Emerging markets 

Source: Goldman Sachs 

Developed markets 

2040 

HQ 

Branches 

IMPLICATIONS FOR HQ 

> Headquarters locations no 

longer reflect the main focuses 

of company activities 

> Fragmentation of value creation 

activities 

> Decision-making powers are 

shifting to the future centers of 

gravity 

> More international management 

committees – regardless of the 

company's country of origin 

> Rise of dislocated HQs 

scattered around the globe

Source: Roland Berger; GDP 

34 

3 

More collaboration in projects – The headquarters has a decisive role as 

an expert and coordinator 

Collaboration in projects – Centralized management 

Universities 

Management 

consultancies 

Suppliers 

Competitors 

Institutes 

Public 

institutions 

… 

EXTERNAL 

PARTNERS 

HR 

American 

region 

Plant 1 

Sales 

Corporate headquarters 

Marketing 

Legal Cont. Finance IT 

European 

region 

… 

… 

… 

Involved in project (illustrative) 

Asian 

region 

… 

… 

… 

Service 

center 

IT HR … 

INTERNAL ORGANIZATION 

(example) 

.. 

> According to a study by 

Gesellschaft für Projektmanagement, 

project work 

now accounts for about a 

third of day-to-day 

business 1) 

> Corporate headquarters 

increasingly have to 

develop and manage a 

network of internal and 

external experts 

> In near future corporate 

headquarters will have to 

initiate even more projects, 

steer these projects and 

ensure timely delivery of 

results 

1) Measured against total annual costs

35 

C. 

Detailed study results


36 

Companies continue to centralize and create new departments 

1 

2 

3 

4 

5 

The relative SIZE of corporate headquarters has GROWN significantly in the last 10 

years – Two WAVES OF CENTRALIZATION: 1999-2002 and 2005-2010 

TRADITIONAL CENTRALIZED FUNCTIONS have GROWN – especially in 

FINANCIAL FUNCTIONS 

The MANAGEMENT STYLE often differs from the ACTUAL ROLE PLAYED by 

corporate headquarters – a reflection of DIFFERING EXPECTATIONS 

SHARED SERVICES remain very important – OUTSOURCING continues to 

DECLINE 

The study finds COMPARABLE STRUCTURES for corporate headquarters ACROSS 

COUNTRIES – a reflection of INTERNATIONALIZATION?


37 

1 

The relative size of corporate headquarters has grown significantly in the 

last ten years – Two waves of centralization 

Trends in the size of corporate headquarters 

Relative size of corporate headquarters 

[employee ratio 1) in %] 

3.0 

2.3 

2.8 

4.5 

> Two waves of centralization 

occurred in the last 10 years – a 

result of the recession and increased 

cost pressures 

> The average employee ratio of the 

corporate headquarters today (4.5%) 

is much higher than in previous 

studies 

0.9 

1999 

2002 

2005 

2008 


> Companies are creating new 

functions and expanding existing 

functions in response to the current 

challenges 

1) Avg. no. of FTEs in the corporate headquarters as a share of total FTEs in company; all companies; corporate center only, i.e. excl. shared services


38 

1 

During the crisis in 2009, support functions were often centralized as a 

way of cutting admin costs 

Examples of companies centralizing their support functions 

> Corporate center expanded and service functions (HR, IT, Purchasing, Real Estate, etc.) and 

controlling functions (Finance, Risk, Legal & Compliance) centralized at Group level 

> Integrated "One Bank" system implemented with a centralized management structure 

> Management and support functions centralized in Muttenz and Basel region 

> Savings mainly expected from synergies and simpler cooperation between operating and 

support functions 

> Seven management entities abolished – Centralization of strategic functions in the corp. HQ 

> De-central set-up of operational management functions in two virtual divisions with four 

business areas each 

> Service tasks bundled into shared service center (focus on IT, HR admin., Accounting, Legal, 

Communications) 

> Direct Board responsibility for key management functions (Corporate Development, 

Communications, Finance, Controlling) 

> Global shared service center for Accounting, IT, Logistics and HR


39 

2 

Traditional centralized functions have grown, operational functions 

remained relatively constant – Financial functions in particular have grown 

STRATEGIC/GROUP FUNCTIONS 

> Company Management 

> Strategy/Corporate Development 

> Communications 

> Investor Relations 

> M&A 

> Legal 

> Patents & Licenses 

> Auditing 

> Organizational Development & Consulting 

> Human Resources 

> IT 

> Occupational Safety & Environmental Protection 

> Real Estate/Facility Management 

> General Services 

Functional 

clusters 


> Finance 

> Controlling 

> Accounting 

> Insurance 

> Tax 

> International Trade and Customer 

Relations 

> Research & Development 

> Procurement & Purchasing 

> Logistics 

> Quality Management 

> Marketing & Sales 

HR & SUPPORT FUNCTIONS 

OPERATIONAL FUNCTIONS


40 

2 

Strategic and financial functions have grown strongly compared to 2008 … 

Strategy/Corporate 

Development 

STRATEGIC/GROUP FUNCTIONS 

Investor Relations/ 

Communications 

Finance/Accounting 


Controlling 

2008 2010 

2008 2010 2008 2010 2008 2010 

> Consulting budgets cut 

and project management 

expertise expanded, e.g. 

inhouse consulting units 

> Investors and creditors 

required greater 

transparency and more 

detailed reports 

> Increased complexity due to greater internationalization 

and presence in different countries 

> Stricter legal requirements 

> Increased spending on evaluations and need for more 

detailed, comprehensive forecasts 

3rd quartile 

Median 

1st quartile

Source: Roland Berger study "Corporate Headquarters 2010"; Roland Berger "Purchasing Excellence study", 2009 

41 

2 

… but HR & Support functions as well as operational functions have grown 

less overall, if at all 

Human Resources 

HR & SUPPORT FUNCTIONS 

IT 

Procurement & 

Purchasing 

OPERATIONAL FUNCTIONS 

Marketing & 

Sales 

2008 2010 

2008 2010 2008 2010 2008 2010 

> War for talent means 

more spending on 

recruitment and HR 

marketing 

> Stronger focus on 

support and development 

for managers 

3rd quartile 

Median 

1st quartile 

> Overall, moderate 

increase in avg. size of 

central IT units 

> There is a striking gap 

between the median and 

the 3rd quartile – Does 

this indicate a trend 

toward insourcing? 

> Increasingly centralized 

coordination and greater 

share of strategic 

purchasing 

> Increasing professionalism 

of purchasing 

depts. – better qualified 

staff, bigger depts. 

> Moderate decline in 

central marketing and 

sales capacity – Does 

this represent a trend 

toward reducing central 

marketing activities?

2 

The trend toward centralization is put into perspective by considering 

overall function costs and their relevant drivers 

Total function costs – Selection 

FUNCTION 

Finance 

HR 

IT 

Purchasing 

RANGE, % 1) 

[TOTAL COSTS/SALES] 

0.2 

1.7 

2.0 2.3 

1.4 2.1 

0.3 1.6 

(% of purchasing volume) 

MAIN COST DRIVERS 

> Legal requirements 

> Degree of internationalization 

> Financing structure and investment intensity 

> etc. 

> Support intensity and location structures 

> Share of work done in-house 

> IT support 

> etc. 

> System landscape 

> Share of work done in-house 

> Service level 

> etc. 

> No. of purchasing groups supported 

> Workflows and system support 

> No. of suppliers (or supplier groups) supported 

> etc. 

1) Depending on the industry and company structure 

Source:Roland Berger research: Several studies 

42


43 

3 

Company size and management concept are the most important factors 

for sizing the corporate headquarters (1/2) 

All companies – Increasing relative size of corporate headquarters 

FTEs in corporate headquarters 

INTEGRATED HEADQUARTERS 

14.000 

12.000 

10.000 

8.000 

1 

1st quartile 

Median 

3rd quartile 

5.7% (3.6%) 

15.2% (11.0%) 

25.3% (16.5%) 

1 2 3 

6.4% (1.3%) 

9.3% (3.0%) 

12.2% (7.6%) 

0.4% (0.5%) 

0.6% (1.1%) 

1.0% (3.1%) 

2 

OPERATIONAL 

HOLDING 

ORGANIZATION 

6.000 

4.000 

2.000 

-0 

- 0 

50.000 100.000 150.000 200.000 250.000 300.000 350.000 

3 

STRATEGIC 

HOLDING 

ORGANIZATION 

Total FTEs 

1 company (…) = findings from study "Corporate Headquarters 2008"


44 

3 

Company size and management concept are the most important factors 

for sizing the corporate headquarters (2/2) 

Cluster: 25,000 total FTEs; 2,000 FTEs in corporate headquarters 

FTEs in corporate headquarters 

INTEGRATED HEADQUARTERS 

2.250 

2.000 

1.750 

1.500 

1.250 

1.000 

750 

1 

1st quartile 

Median 

3rd quartile 

5.7% (3.6%) 

15.2% (11.0%) 

25.3% (16.5%) 

1 2 3 

6.4% (1.3%) 

9.3% (3.0%) 

12.2% (7.6%) 

0.4% (0.5%) 

0.6% (1.1%) 

1.0% (3.1%) 

2 

OPERATIONAL 

HOLDING 

ORGANIZATION 

500 

250 

-0 

- 0 

5.000 10.000 15.000 20.000 25.000 

3 

STRATEGIC 

HOLDING 

ORGANIZATION 

Total FTEs 

1 company (…) = findings from study "Corporate Headquarters 2008"

3 

Discrepancies between management style and actual roles result in 

different expectations of the headquarters 

Deviation between actual role and management style (13 companies) 


MANAGEMENT CONCEPT 

Financial/ 

strateg. holding 

company 

X 

X 

Discrepancy 

Operational 

holding 

company 

Details of management concept 

Actual management style/role 

Integrated 

headquarters 

X 

Management style is more 

comprehensive than the actual 

role 

The actual role is more 

comprehensive than the 

management style 

> In very many cases, management 

style differs greatly from the actual 

role 

> The real role of headquarters is 

determined by 

– Degree of centralization 

– Size of functions, headcount 

– Type of centralized functions 

> Discrepancy between management 

style and actual role expresses 

diverging expectations on the part of 

management and e.g. operational 

units 

> This discrepancy may lead to 

misallocation of resources (too much 

or too little) at headquarters 

45


46 

3 

Most corporate headquarters view themselves as "managers", few see 

themselves as "service providers" 

Role of headquarters 

Horizontal 

Type of 

coordination 

Vertical 

Corporate function 

LAW 

GUARDIAN 

> Policy making 

> Legal framework 

MANAGER 

> Management/ 

monitoring 

> Strategy/resources 

HQ function 

BUSINESS 

PARTNER 

> Advice/coordination 

> Know-how/ innovation 

Central service 

SERVICE 

PROVIDER 

> Services 

> Efficiency/cost focus 

> Defined role of the corporate 

center and the respective 

corporate functions determine 

– Activity portfolio 

– Decision-making rights 

– Sizing 

> In principle, the sizing of the 

respective corporate functions 

goes hand in hand with the 

activity portfolio and the power 

of the corporate HQ to directly 

steer the operational/business 

units 

Very high 

Scope of authority 

None

Source: Roland Berger study "Corporate Headquarters" 2005/2008/2010 

47 

4 

Shared service centers remain very important – Outsourcing continues to 

decline 

Trend in SHARED SERVICE CENTERS 

Trend in OUTSOURCING 

CC 

SSC 

CC 

External service 

providers 

BU BU BU 

BU BU BU 

CENTRALIZATION/BUNDLING 

+ 

PRIORITIZATION/RATIONALIZATION 

Proportion of companies with shared service 

units 

2005 

38% 

2008 

49% 


Proportion of companies that have outsourced 

corporate functions 

2005 

2008 


53% 

42% 44% 

32%


48 

4 

Shared service centers are less common, but used more heavily where 

they exist – Top SSC functions remain IT, HR and Accounting 

Use of SSC SSC as share of total 1) 

Proportion of 

companies 

using SSCs 

Top 5 SSC functions 2) 

42% 

49% 

55% 

44% 

SSC's share of function 3) 

> Use of SSCs is down 

overall, but companies 

that do have SSCs use 

them more heavily than 

in the past 

1 

2 

3 

4 

5 

IT 

HR 

Accounting 

Finance 

General 

Services 

14% 

16% 

22% 

21% 

22% 

22% 

29% 

30% 

26% 

28% 

77% 

81% 

66% 

56% 

86% 

76% 

65% 

54% 

86% 

91% 

> The SSC's share of the 

top 3 functions is similar 

to 2008 

> Finance: areas where 

SSCs are used more 

heavily include Treasury 

(13% vs. 7%) and 

Financing (8% vs. 2%) 

2010 2008 

1) Avg. share of FTEs in the SCC compared to total size of corporate center (corporate center + SSC) 2) Proportion of companies using SSCs for the function in question 

3) Avg. share of the SSC compared to the total size of the function in the companies that say they use SSCs for the function in question


49 

4 

Outsourcing continues to decline – IT and General Services are now the 

top functions outsourced 

TOP 5 functions for 

outsourcing 1) 

Degree of 

outsourcing 2) 


2008 

1 

2 

3 

4 

5 

1 

2 

3 

IT 

(2008: Position 6) 

Gen. Services 

Legal 

Real Estate 11% 

Auditing 

Legal 

Insurance 

Gen. Services 

11% 

19% 

17% 

13% 

26% 

21% 

16% 

37% 

44% 

38% 

61% 

67% 

73% 

80% 

76% 

> Outsourcing generally used for 

standardized services, e.g. 

– IT: Application support 

(13%), operation/ 

data processing (19%), 

network infrastructure 

(8%), software 

development (8%) 

– General services: 

Cleaning (22%), security 

(18%), staff canteen (15%) 

– Legal: General law (8%), 

company law (7%) 

4 


14% 

27% 

5 

Audit 

12% 

69% 

1) Proportion of companies that outsource the function concerned 2) Degree of outsourcing in companies that say they outsource the function


50 

5 

Structures are comparable across countries – Similar relative size of 

corporate headquarters and use of shared services 

RELATIVE SIZE OF CORPORATE HEADQUARTERS [%] 1) 

Integrated headquarters Op. holding org. Strategic holding org. 

14% 14% 

10% 

Europe 2) Rest 

of world 

10% 9% 

7% 


of world 

No. of operational units 1) Use of SSC [%] 

Germany 

Europe 2) 

Rest of 

world 

6.0 

7.0 

8.1 

Germany 

Europe 2) 

Rest of 

world 

0.8% 1.3% 0.3% 

> The size of corporate 

headquarters is comparable 

across countries – similar 

picture found if shared services 

is included 

> The number of operational units 

is also similar – cross-section of 

different industries with similar 

international structure 

> IT and HR are most likely to be 

part of shared services 

internationally, too 

> The fact that corporate 

headquarters have similar 

structures may be a reflection of 

the companies' internationalization 

Germany 

Germany 

Germany 


of world 

37% 

43% 

44% 

1) Outliers eliminated 2) Excluding Germany

51 

D. 

Contacts and exclusive workshop offer


52 

Your contacts at Roland Berger Strategy Consultants 

Dr. Tim Zimmermann 

Partner 

Tel.: +49 89 9230-8362 

Fax: +49 89 9230-8264 

E-Mail: tim_zimmermann@de.rolandberger.com 

Fabian Huhle 

Senior Project Manager 

Tel.: +49 89 9230-8486 

Fax: +49 89 5485-8486 

E-Mail: fabian_huhle@de.rolandberger.com 

Theresa Tenneberg 

Senior Consultant 

Tel.: +49 89 9230-8578 

Fax: +49 89 5485-8578 

E-Mail: theresa_tenneberg@de.rolandberger.com 

Benjamin Puche 

Consultant 

Tel.: +49 89 9230-8236 

Fax: +49 89 5485-8236 

E-Mail: benjamin_puche@de.rolandberger.com


53 

Visit us online at www.corporateheadquarters.de 

Corporate headquarters website 

> Regular new studies, 

presentations, etc. on all 

aspects of organization, 

management and 

benchmarking 

> Presentation of general 

study findings 

> Easy to navigate through 

quick links 

> Portal for subsequent 

editions of the study


54 

Our exclusive offer to you: We invite you for a workshop to discuss your 

individual benchmarking results 

Exclusive workshop on corporate headquarters 

WORKSHOP AGENDA 

A. Goals of the workshop 

B. Current challenges 

C. Benchmarking results 

D. First levers for optimization 

OFFER 

DURATION 

> 2-3 hours (depending on scope) 

PARTICIPANTS 

> CEO/CFO 

> Selected corporate HQ 

representatives 

> etc. 

E. Next steps


55 

Time series analyses, external benchmarking and expert opinions are 

common benchmarking techniques 

Benchmarking techniques 

TIME SERIES 

ANALYSIS 

EXTERNAL 

BENCHMARKING 

EXPERT 

OPINIONS 

> Compares relevant KPIs in time 

series 

> Identifies best practices in time 

series for certain sizes of companies 

> Analyzes the performance to date 

and calculates the potential on the 

basis of past best practices 

> Compares relevant KPIs with 

external data 

> Where necessary and possible, 

adjusts parameters to ensure that 

figures are comparable 

> Identifies benchmarks on the basis 

of data from one company or 

comparable clusters (e.g. industry) 

> Expert or external 

providers analyze selected 

KPIs top-down 

> They normally assess and 

validate the sales 

opportunities for ordered 

stocks or services within a 

company (e.g. fleet, 

insurance) 

Result: Initial top-down assessment of possible improvements

For each specific benchmark analysis, we refer to our database containing 

data from more than 300 companies (dating as far back as 2000) 

Data origin and customization 

"Corporate Headquarters" 

studies 

Roland 

Berger 

benchmark 

database 

> Customization by cluster 

– Size (headcount) 

– Industry 

– Management concept 

> Selection of individual company (sanitized) 

> Benchmarking of individual functions 

– Distribution by corporate center and shared 

services 

– Consideration of the degree of centralization 

– Consideration of the degree of outsourcing 

– Addition of a "detailed view" at the level of 

subfunctions 

Research 

Projects 


56


57 

BACKUP 

HQ functions can be properly sized following benchmarking against a 

specifically customized cluster and discussion of the issues in detail 

Example of function-specific benchmarking 

Management Accounting [FTE] 1) 

Degree of 

centralization [%] 

Median 2) 

in production/ 

manufacturing 

Median 2) 

in a strategic 

holding 

organization 

38 3 100 28 8 50 

51.0 

Company 

XYZ 

91.4 

7.2 

9.7 

3.7 

40.6 

29,9 

403.6 

85.0 

A B C D 

18.7 

14.2 

The most comparable companies 

E 

55.4 

27.3 

Notes from an external perspective 

> Task portfolio 

– How are tasks split between centralized and 

decentralized Management Accounting? 

– How many units does the centralized Management 

Accounting team deal with for tasks like budgeting, 

planning, cost controlling and reporting? 

> Processes 

– How are management accounting processes handled 

centrally and locally? 

– How often, how many and which KPIs are employed by 

Management Accounting/Reporting? 

> Systems and tools 

– Does Management Accounting use standard 

applications like SAP? 

FTEs at headquarters 

Adjusted to reflect the degree of centralization at company XYZ 

1) Figures adjusted for the number of employees at company XYZ 2) Median figures from the 2005 study


BEST_Roland Berger tool_July 09_E_Final.pptx 

2008_11_CmeetsA Vorstandsstrukturen_Zimmermann_final.pptx 

1 

"A4rb_standard" – 2 080924– do not delete this text object! 

58 

Further reading on corporate headquarters and benchmarking – We are 

happy to provide you with our recent publications 

Publications Roland Berger 

CORPORATE HEADQUARTERS 2010 

Study results: Corporate headquarters are getting 

bigger – but are they getting smarter? 

Munich, September 2010 

Corporate Headquarters 

2005, 2008, 2010 

Focus on corporate 

HQ, 2008 

Reinventing 

corporate HQ, 2006 

CEE Headquarters, 

2007 

Organizing profitable 

growth, 2008 

Benchmark-based structural cost reduction 

for automotive suppliers 

MODERNE 

VORSTANDSSTRUKTUREN 

Dr. Tim Zimmermann 

München, 21. November 2008 

July 2009 

Purchasing Excellence 

1999, 2003, 2009 

Managing the IT cost 

challenge, 2009 

Automotive supplier 

study, 2009 

Modern Management Board 

structures (German), 2008

Appendix 1 

Study participants and design 

59


60 

The fifth edition of the Roland Berger study looks also at long-term trends 

1999 

Management concept and size of corporate headquarters 

2002 

2005 

2008 


Management concept and size of corporate headquarters as 

well as the trend toward centralization 


well as the trend toward centralization 

Additionally: Germany as an attractive location for HQ 


well as organizational trends 

Additionally: Changing view of HQ's role 

Management concept and size of corporate 

headquarters as well as organizational trends 

Additionally: Long-term trends


CLUSTERS FOR 

THE ANALYSES 

61 

72 companies of various size and with different management concepts 

took part in the study 

Study participants (n=72) by key attribute [%] 

SIZE [employees] 

INDUSTRY SECTOR 

MANAGEMENT CONCEPT 

>50,000 

25,000- 

50,000 13% 

5,000- 

25,000 

19% 

10% 

29% 

39% 

>5,000 

Trade 

Service 36% 

6% 

58% 

Manufacturing 

Strategic 

holding 

38% 

Operational 

holding 

18% 

44% 

Integrated 

headquarters 

SIZE [sales in EUR m] 

NUMBER OF OPERATIONAL 

UNITS 

COUNTRY OF ORIGIN 

>30,000 1-3 

Rest of world 

10% 

>7 13% 

10,000- 


62 

BACKUP 

Definition of the mgmt. cluster – Management and leadership principle, i.e. 

BU integration is a differentiation factor for types of holding organization 

QUESTION 1: 

Legally and organizationally independent 

subsidiaries? 

Organizational unit comprising 

management, service and 

operational functions 

QUESTION 2: 

Management 

& leadership 

principle? 

Operational 

influence 

Strategic 

planning & 

management 

Strategic 

management 

HOLDING 

Strategic management 

holding organization 

Synergyoriented 

management 

holding org. 

Controlling 

management 

holding org. 

Operational 

management 

holding org. 

INTEGRATED 

HQ 

Integrated 

business 

units and 

systems 

Financial 

management 

Financial 

holding 

organization 

Decentralized 

business units 

Shared 

expertise 

Shared 

systems 

Related 

business 

systems 

BUSINESS UNIT INTEGRATION

Corporate headquarters 

Service centers 

Decentralized operational 

units 

External service providers 

(outsourcing) 

Data on the size of corporate headquarters was gathered at various levels 

Functions and capacities included in the study 

Full-time 

employees in the 

overhead 

functions of the 

company overall 

(incl. outsourcing 

at headquarters 

level) 

Focus of the study 

Data gathering 

on full-time jobs 

Degree of centralization [%] 

Degree of outsourcing [%] 1) 

INTERNAL CAPACITIES 

> Centralized units (corporate 

headquarters and service centers): 

Full-time capacities in central 

corporate functions are recorded in the 

questionnaire direct 

> Decentralized units (operational 

units): Full-time capacities are 

estimated by the company based 

on the total number of employees 

per function (number of employees 

in centralized and decentralized 

units) 

EXTERNAL CAPACITIES 

> Number of employees at external 

service providers is estimated by 

the company based on the degree 

of outsourcing, in other words, the 

ratio of internal to external 

capacities 

1) Basis: External FTEs/(total FTEs in the respective function (in CC and SSC) incl. external capacities) 

FTE = Full-time equivalents 


63


64 

BACKUP 

Definition of holding organization 

Holding organization (outline) 

CHARACTERISTICS 

Holding organization 

> There are two levels in a holding organization: the corporate 

headquarters and several legally and organizationally 

independent subsidiaries 

> The operational business (production, operations, etc.) takes 

place in the subsidiaries 

Subsidiary 

Subsidiary 

Subsidiary 

Subsidiary 

> P&L responsibility normally lies with the subsidiaries 

> It is important to differentiate between holding organization 

and "holding" as a legal term (a holding organization can also 

exist within a single legal entity)


65 

BACKUP 

Definition of integrated headquarters 

Integrated headquarters (outline) 

Services 

Integrated headquarters 

Business 

unit 

Business 

unit 

Business 

unit 

Organizational unit comprising 

management, service and operational 

functions 

CHARACTERISTICS 

> In the case of integrated headquarters, management, service 

and operational tasks are integrated in the corporate 

headquarters 

> The management exercises a strong influence on the 

operational business of its business units (high degree of 

centralization) 

> P&L responsibility normally lies with the corporate 

headquarters 

> The integrated headquarters makes its own contribution to the 

company's profit by offering services to the external market

Appendix 2 

Study results: Statistics 

66


67 

Management concept, company size and industry segment determine the 

relative size of the corporate headquarters 

INTEGRATED 

HEADQUARTERS 

OPERATIONAL 

HOLDING ORG. 

STRATEGIC 

HOLDING ORG. 

Average size of 

company 1) 

[number of employees] 

13,604 (14,268) 19,197 (23,688) 

67,460 (46,726) 

Median relative size of 

corporate headquarters 

[%] 

CC 1) 

15.2% (11.0%) 9.3% (3.0%) 

0.6% (1.1%) 

CC+SSU 2) 17.1% (12.3%) 9.9% (6.0%) 

1.6% (2.0%) 

Average number of 

operational units [%] 

1-3: 37% 

4-7: 50% 

>7: 13% 

1-3: 20% 

4-7: 40% 

>7: 40% 

1-3: 8% 

4-7: 46% 

>7: 46% 

1) Corporate center only, i.e. without shared services 2) Corporate center and share services 

(…) = Findings from study: "Corporate Headquarters 2008" 

Basic criteria for further calculations


68 

Benchmark overview by size and management concept – Comparison of 

corporate centers 2010 and 2008 

Relative size of corporate headquarters (corporate center only) 1) [%] 

Operational holding 

Strategic holding 

Total 

(by size cluster) 

Size (Total 

employees) 

0- 

5.000 


5.000- 

25.000 

25.000- 

50.000 

>50.000 

Total 

(by management 

concept) 

1st quartile 6.9 (12.3) 4.8 (2.7) not (2.5) not (n.v.) 5.7 (3.6) 

Median 20.9 (16.5) 10.2 (3.0) enough (3.6) enough (n.v.) 15.2 (11.0) 

3rd quartile 30.8 (31.5) 15.2 (6.3) data (9.4) data (n.v.) 25.4 (16.5) 

1st quartile 9.3 (3.6) 7.9 (1.3) 4.9 (n.v.) not (n.v.) 6.4 (1.3) 

Median 12.2 (4.5) 9.4 (1.6) 5.1 (n.v.) enough (n.v.) 9.3 (3.0) 

3rd quartile 12.7 (7.6) 12.1 (5.1) 6.4 (n.v.) data (n.v.) 12.2 (7.6) 

1st quartile 0.8 (1.9) 0.5 (0.7) 0.5 (0.6) 0.3 (0.2) 0.5 (0.5) 

Median 1.1 (4.3) 0.8 (1.1) 0.7 (0.7) 0.5 (0.3) 0.6 (1.1) 

3rd quartile 2.6 (9.9) 1.6 (2.5) 0.7 (1.0) 0.6 (0.5) 1.1 (3.1) 

1st quartile 5.8 (4.4) 0.8 (0.8) 0.7 (0.8) 0.4 (0.3) 0.7 (0.9) 

Median 12.5 (7.7) 4.4 (1.7) 1.4 (1.7) 0.6 (0.5) 4.5 (2.8) 

3rd quartile 26.7 (20.9) 10.2 (3.1) 4.8 (3.1) 3.6 (1.6) 10.4 (9.7) 

(…) = Findings from study "Corporate Headquarters 2008" 

1) Excluding shared services


69 

Benchmarking overview by size and management concept – 

Comparison of corporate center and shared services 

Relative size of corporate headquarters (corporate center with/without shared service units) [%] 

Operational holding 

Strategic holding 

Total 

(by size cluster) 

Size (Total 

employees) 

0- 

5.000 


5.000- 

25.000 

25.000- 

50.000 

>50.000 

Total 

(by management 

concept) 

1st quartile 6.9 (10.1) 4.8 (4.8) not (n.a.) not (n.a.) 5.7 (7.0) 

Median 20.9 (27.4) 10.2 (10.2) enough (n.a.) enough (n.a.) 15.2 (17.1) 

3rd quartile 30.8 (37.9) 15.2 (18.3) data (n.a.) data (n.a.) 25.4 (30.3) 

1st quartile 9.3 (9.3) 7.9 (8.9) 4.9 4.90 not (n.a.) 6.4 (6.4) 

Median 12.2 (12.2) 9.4 (11.3) 5.1 5.10 enough (n.a.) 9.3 (9.9) 

3rd quartile 12.7 (12.7) 12.1 (13.0) 6.4 9.40 data (n.a.) 12.2 (12.7) 

1st quartile 0.8 (1.9) 0.5 (0.5) 0.5 (2.3) 0.3 (0.4) 0.5 (0.6) 

Median 1.1 (2.2) 0.8 (1.4) 0.7 (3.2) 0.5 (1.3) 0.6 (1.6) 

3rd quartile 2.6 (3.2) 1.6 (1.9) 0.7 (5.1) 0.6 (3.2) 1.1 (3.2) 

1st quartile 5.8 (8.4) 0.8 (1.6) 0.7 (3.0) 0.4 (1.1) 0.7 (0.7) 

Median 12.5 (17.4) 4.4 (4.8) 1.4 (4.9) 0.6 (3.2) 4.5 (4.5) 

3rd quartile 26.7 (31.2) 10.2 (12.3) 4.8 (7.3) 3.6 (6.7) 10.4 (10.4) 

… = Corporate center excluding shared service units 

(…) = Corporate center and shared service units


Company management 

Strategic planning/ 

corporate development 


Investor relations 

Mergers & acquisitions 

Law 

Patents and licenses 

Auditing 

Organizational 

development and 

Finance 

Controlling 

Accounting 

Insurance 

Taxes 

International trade and 

customs management 

Human resources 

IT 

Occupational safety and 

environmental protection 

Real estate/ facility 

management 

General services 

Research and development 

Purchasing and 

procurement 

Logistics 

Quality management 

Marketing and sales 

70 

Benchmark overview for all study participants – Degree of homogeneity 

varies by functional cluster 

Relative size of function [‰] – corporate center and shared services 

Figures for all participating companies 

Category Strategic/corporate functions Finance functions HR and support functions Operational functions 

1st quartile 0.58 0.24 0.48 0.10 0.09 0.44 0.12 0.56 0.06 0.64 0.86 1.62 0.08 0.29 0.65 2.15 2.47 0.32 0.54 1.30 0.81 1.56 1.36 0.31 1.62 

Median 1.63 0.72 1.17 0.26 0.17 1.22 0.21 1.19 0.27 2.14 2.54 6.76 0.33 0.64 1.50 6.68 7.43 1.54 2.37 4.38 3.86 4.87 6.61 1.44 5.47 

3rd quartile 4.80 2.00 2.76 0.78 0.47 4.19 0.47 3.13 1.49 4.72 6.65 14.75 0.75 1.40 5.26 11.35 17.99 3.90 4.52 9.78 10.51 8.93 13.63 4.52 31.65








Law 


Auditing 



Finance 

Controlling 

Accounting 

Insurance 

Taxes 




IT 




management 




procurement 

Logistics 



71 

BACKUP 

Benchmarking overview by company size 



functions 

Clusters 

[employees] 

< 5,000 

5,000 - 

25,000 

25,000- 

50,000 

1st quartile 2.59 1.68 0.74 1.02 0.36 1.07 not 0.66 0.98 2.26 2.47 6.78 0.32 0.64 1.35 4.72 6.53 1.94 2.37 3.88 2.02 3.23 8.30 0.87 5.66 

Median 5.62 2.24 1.71 1.40 0.87 3.04 enough 2.44 1.51 3.57 6.12 12.06 0.92 1.78 3.05 9.01 13.71 3.91 3.31 7.20 7.04 8.36 9.02 3.52 18.70 

3rd quartile 9.07 4.13 4.62 1.89 1.45 5.30 data 4.96 2.49 14.08 11.02 26.18 1.15 3.01 4.92 14.83 21.59 7.48 6.45 20.29 10.47 13.09 31.68 6.16 60.31 

1st quartile 0.73 0.26 0.57 0.17 0.12 0.34 not 0.62 0.16 0.55 0.62 0.68 0.14 0.34 0.32 0.65 2.54 0.79 0.44 0.37 not 2.94 1.03 0.55 1.21 

Median 1.41 0.72 1.62 0.32 0.16 1.01 enough 1.19 0.34 1.48 2.80 3.24 0.39 0.46 0.39 5.57 7.05 2.52 1.07 2.20 enough 4.19 1.57 1.41 2.19 

3rd quartile 2.39 1.01 2.53 0.66 0.60 3.10 data 1.69 1.16 2.75 4.10 14.62 0.66 0.91 2.28 8.67 15.96 3.83 2.45 8.16 data 7.00 3.76 1.61 9.16 

1st quartile 0.56 0.17 0.49 0.15 0.07 0.49 0.09 0.78 not 0.66 0.93 1.25 0.42 0.34 not 3.67 5.43 0.17 0.81 0.59 0.76 1.35 not not 0.78 

Median 0.71 0.26 1.05 0.25 0.11 1.63 0.13 1.06 enough 1.24 1.08 4.37 0.43 0.68 enough 4.70 7.43 0.30 2.71 5.15 0.96 2.31 enough enough 2.03 

3rd quartile 1.34 1.59 1.78 0.26 0.26 3.82 0.23 1.74 data 4.32 1.66 10.61 0.49 1.15 data 7.29 14.02 1.33 6.58 9.04 1.84 6.97 data data 5.42 

> 50,000 1st quartile 0.12 0.18 0.28 0.05 0.08 0.22 not 0.21 0.04 0.34 0.19 1.31 0.05 0.14 not 0.81 0.47 0.16 0.24 0.42 0.66 0.20 not not 0.09 

Median 0.31 0.24 0.42 0.07 0.12 0.55 enough 0.59 0.12 0.77 0.60 2.06 0.08 0.19 enough 3.33 0.62 0.23 0.91 1.42 1.55 0.89 enough enough 0.29 

3rd quartile 0.48 0.37 1.05 0.09 0.25 1.21 data 1.92 0.27 1.02 1.91 3.73 0.23 0.45 data 7.40 5.45 0.45 2.73 5.47 12.26 1.61 data data 1.65 

Category Strategic/corporate functions Finance functions HR and support functions Operational functions








Law 


Auditing 



Finance 

Controlling 

Accounting 

Insurance 

Taxes 




IT 




management 




procurement 

Logistics 



72 

BACKUP 

Benchmarking overview by industry sector 



functions 

Clusters 

[industry] 

Trade 

1) 

Services 

Producing 

and 

manuf. 

1st quartile 0.21 0.13 not not not 0.10 not 0.83 not 0.23 0.22 not not not not 0.73 0.41 not not 0.56 not not not not not 

Median 0.24 0.16 enough enough enough 0.23 enough 1.18 enough 0.35 0.54 enough enough enough enough 2.26 2.83 enough enough 0.80 enough enough enough enough enough 

3rd quartile 0.37 0.19 data data data 0.38 data 1.32 data 0.50 0.89 data data data data 4.34 5.22 data data 3.13 data data data data data 

1st quartile 1.31 0.34 0.62 0.14 0.10 0.88 0.16 0.67 0.26 0.98 1.45 2.45 0.27 0.24 not 4.46 4.89 0.37 1.29 2.45 2.38 1.61 1.34 0.80 2.08 

Median 2.64 0.87 1.22 0.25 0.26 1.49 0.17 2.66 1.16 2.34 2.80 4.28 0.49 0.57 enough 8.02 14.02 0.63 2.59 5.47 8.87 2.94 1.42 1.54 10.06 

3rd quartile 4.47 2.07 2.84 0.66 0.53 4.78 0.73 6.64 1.49 6.37 8.58 12.88 3.13 1.34 data 10.41 22.66 2.77 4.01 18.50 18.31 6.06 14.39 2.63 58.41 

1st quartile 0.56 0.26 0.48 0.11 0.10 0.31 0.09 0.54 0.06 0.66 0.73 1.15 0.11 0.37 0.39 1.96 2.55 0.47 0.37 0.42 0.52 1.41 3.15 0.29 0.66 

Median 1.37 0.91 1.17 0.28 0.19 1.61 0.25 0.89 0.23 2.20 2.62 9.48 0.33 0.64 0.94 4.99 7.33 2.05 2.07 4.36 2.76 6.77 8.30 1.67 3.02 

3rd quartile 6.09 2.12 2.76 0.96 0.59 4.21 0.36 2.02 1.13 5.47 6.44 18.22 0.75 1.68 1.73 11.87 14.41 4.65 7.29 8.91 9.13 12.02 13.85 5.64 22.56 

Category Strategic/corporate functions Finance functions HR and support functions Operational functions 

1) Small population








Law 


Auditing 



Finance 

Controlling 

Accounting 

Insurance 

Taxes 




IT 




management 




procurement 

Logistics 



73 

BACKUP 

Benchmarking overview by management concept 



functions 

Clusters 

[mgmt. concept] 

Integrated 

headquarters 

Operational 

holding 

1st quartile 1.74 0.72 0.72 0.26 0.64 1.01 0.17 1.06 0.25 2.00 2.70 3.47 0.28 0.62 0.40 6.68 7.46 1.09 1.85 3.05 4.16 3.38 2.14 1.22 6.23 

Median 4.39 1.85 2.22 0.74 1.28 2.09 0.25 3.00 1.20 3.46 3.93 10.97 0.75 0.94 1.50 8.67 15.96 2.77 3.13 5.82 8.41 7.00 8.84 2.25 26.42 

3rd quartile 8.80 3.44 4.20 1.48 1.53 4.61 0.73 4.59 1.83 13.53 11.42 23.85 1.21 2.30 5.92 15.18 30.68 5.08 5.83 14.32 18.31 12.55 13.63 6.12 65.63 

1st quartile 0.92 0.33 0.80 0.28 not 1.60 not 0.89 1.00 2.81 1.44 5.88 0.55 0.45 not 4.46 5.45 0.37 0.53 1.42 0.96 2.49 1.15 0.23 2.32 

Median 2.40 1.30 1.61 0.35 enough 3.94 enough 1.30 1.49 3.57 3.77 10.77 0.70 1.12 enough 7.64 10.30 1.33 1.19 4.98 4.46 6.36 3.68 0.27 4.56 

3rd quartile 5.74 2.09 3.10 0.68 data 4.40 data 3.84 1.81 7.31 8.42 15.69 0.82 1.92 data 13.76 14.99 3.69 5.29 9.01 7.20 8.82 5.41 0.31 8.83 

Strategic 

holding 

1st quartile 0.24 0.15 0.27 0.06 0.06 0.17 0.11 0.25 0.06 0.34 0.24 0.58 0.06 0.19 not 0.51 0.47 0.18 0.16 0.32 0.17 0.39 not not 0.17 

Median 0.56 0.23 0.54 0.14 0.11 0.42 0.16 0.50 0.06 0.58 0.56 1.15 0.08 0.29 enough 1.19 1.46 0.24 0.70 0.42 0.76 1.23 enough enough 0.35 

3rd quartile 1.25 0.43 1.24 0.25 0.19 1.11 0.27 0.74 0.26 0.97 1.22 4.22 0.33 0.49 data 4.13 6.31 0.36 2.65 2.68 2.27 1.97 data data 1.38 

Category Strategic/corporate functions Finance functions HR and support functions Operational functions


74 

The costs of the corporate headquarters depend on management concept, 

size of company, and industry 

Relative costs of the corporate headquarters [EUR '000; median] 

MANAGE- 

MENT 

CONCEPT 

EUR '000 

Integrated HQ 

Op. holding org. 

Strategic holding org. 

Labor costs of 

CC/FTE CC 

42.4 

59.9 

155.6 

Labor costs of 

SSU/FTE SSU 

40.3 

59.4 

40.4 

Costs HQ 1) 

/revenues 

2.9% 

2.0% 

1.7% 

NOTES 

> Labor costs in SSC 

are much lower than 

in CC, especially for 

medium-sized to large 

companies 

SIZE 

< 5,000 

5,000-25,000 

> 25,000 

34.5 

59.5 

115.7 

39.5 

39.6 

46.5 

2.9% 

3.2% 

1.7% 

> The level of labor 

costs in CC depends 

on the size of the 

company and the 

management concept 

INDUSTRY 

Manufacturing 

Service 

Trade 2) 

59.5 

57.4 

132.6 

46.5 

39.6 

45.3 

1.8% 

9.7% 

1.2% 

> The share of HQ 

costs compared to 

revenues is highest in 

the service industry 

TOTAL 

58.8 

41.0 

2.0% 

1) HQ = CC + SSU 

2) Small population

75 

Disclaimer 

This document contains the findings of a broad-based study conducted by Roland 

Berger Strategy Consultants 

The findings are based on statements made by the participating companies in a 

standardized format. Roland Berger Strategy Consultants is therefore unable to take 

responsibility for the accuracy of the data provided. All analyses were conducted by 

Roland Berger under the best possible conditions and methods 

The findings of the "Corporate Headquarters 2010" study require in-depth interpretation. 

A detailed analysis of the specific situation will need to be carried out before any 

conclusions can be drawn or recommendations made 

For discussion of the study results, Roland Berger Strategy Consultants offers a joint 

workshop upon request 

All data is strictly confidential. Publication or circulation of the study results is only 

permitted with the prior consent of Roland Berger Strategy Consultants

delivering results 

76

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