SG&A Productivity: Find Structural Performance, Not Just Cost

SG&A improvement is often launched with a percentage target: reduce the cost base by five or ten percent, flatten a function, freeze hiring, or benchmark spending against peers. Those actions can create urgency, but they do not by themselves explain why the cost exists, which work creates value, or whether the organization can actually sustain the reduction.

A stronger diagnostic begins with the economics and the work. Leadership needs a defensible baseline for cost, headcount, external spend, service levels, demand, and major activity drivers. From there, the question becomes where capacity is being consumed without enough return: duplicated processes, excessive coordination, fragmented systems, unnecessary management layers, manual work, low-value reporting, inconsistent policies, vendor complexity, or capabilities that have grown faster than the business need they were designed to serve.

Organization design matters, but spans and layers should not be used as blunt benchmarks. A narrow span can reflect unnecessary hierarchy, or it can reflect complex specialist work, risk requirements, geographic dispersion, or a leadership role with substantial external responsibilities. The useful question is whether the structure, decision rights, and workflow allow the work to be performed at the right level with the right amount of management attention.

Shared services and centralization can create real value when similar work is being performed repeatedly across business units or geographies. They can also destroy value if the service model becomes distant from the customer, adds handoffs, or standardizes work that actually requires market judgment. The value case should therefore connect cost to service design, process ownership, technology, and the operating model rather than assuming that centralization is inherently more efficient.

AI and automation add another dimension. A tool that saves minutes on a task does not automatically reduce enterprise cost or create capacity that the organization can redeploy. Leaders need to understand the end-to-end workflow, how frequently the task occurs, who performs it, what review is required, whether demand will grow, and what will happen to the released capacity. Otherwise local productivity claims can accumulate without changing SG&A or business performance.

Opportunity sizing should make uncertainty visible. Each material lever should have a baseline, value range, assumptions, timing, implementation cost, dependencies, operational risk, and confidence level. This prevents the program from turning aspirational gross opportunities into committed net savings before the organization has determined whether the changes are executable.

The final design test is whether the business becomes easier to run. A strong SG&A program should simplify work, clarify ownership, improve management information, reduce avoidable coordination, and redirect capacity toward priorities that matter. If the enterprise is merely spending less while complexity and service problems increase, the apparent savings may not be structural.

Valent Advisory approaches SG&A productivity as a performance and operating-model question. The work starts with the fact base, identifies where cost and capacity are structurally misaligned with value, sizes the most credible levers, and builds the ownership and execution cadence required to capture the benefit without weakening the capabilities the business needs to compete.