How operations leaders build a support-function model that stays lean – without starving the business
General and Administrative (G&A) – costs rarely “explode” in one quarter. It creeps – through complexity, new layers, exceptions, shadow teams and duplicated tools. Then a downturn hits, budgets are cut, service levels fall and costs quietly rebuild as growth returns. That’s the G&A cost cycle – and recent benchmarks suggest it’s intensifying.
One 2025 benchmark study found SG&A is at a five-year high in the US, with a median SG&A ratio of 14.3%, and 62% of companies struggling to control spending amid slowing revenue growth. A parallel European study reported SG&A costs rising to the highest level since 2020, with 63% of companies seeing SG&A increase as a share of revenue and 78% failing to keep costs aligned with inflation.
At the same time, finance leaders are being explicit: in a 2025 survey of CFOs, enterprise-wide cost optimization ranked among the top priorities heading into 2026.
The implication for Operations: cost cutting is not the strategy. The strategy is building a support-function operating model that can scale up and down without re-creating the same overhead every cycle.
Why traditional cost programs don’t stick
Most G&A programs rely on familiar levers – hiring freezes, travel cuts, vendor renegotiations, outsourcing, or periodic reorganizations. They work short-term, but the cost base returns because the underlying drivers remain:
- Complexity compounds faster than productivity. Every new product, market, compliance requirement, or “special deal” creates more work – and most organizations fund it with incremental headcount, not redesign.
- Demand for support services is unmanaged. Business units treat support as “free,” so requests proliferate: bespoke reports, manual exceptions, one-off approvals, custom workflows.
- Work isn’t redesigned – only redistributed. Costs move around (from corporate to regions, from functions to projects, from payroll to contractors), but the volume of work stays the same.
A classic pattern is the “optimism trap”: when performance improves, discipline fades and overhead rises faster than activity – seen in analyses of how G&A can outgrow underlying business drivers over time.
The new operations playbook: redesign the work, then automate the work
Breaking the cycle usually requires three shifts:
Shift 1: From “cut percentage” to “clean-sheet service design”
Instead of asking, “How do we cut 10%?”, ask: “If we were building these support services today, what would we design – and what would we never build?”
This forces clarity on:
- what services must exist (and at what SLA)
- what can be standardized
- what can be self-served or eliminated
Shift 2: From functional silos to end-to-end workstreams
G&A cost is often hidden in handoffs (e.g., hire-to-retire, procure-to-pay, record-to-report). A big part of the savings is removing duplication and rework across functions – then measuring performance like an operation, not a department.
A cross-industry operations analysis defines SG&A broadly (finance, HR, overhead, etc.) and frames the core challenge as achieving excellence, not just trimming budgets – because these costs are frequently targeted when margins are squeezed.
Shift 3: From “shared services as a location strategy” to “shared services as a scale strategy”
Shared services only become structurally advantaged when they are designed for volume, standardization, and automation.
One study of shared services found a clear scale relationship: more transactions supported by shared services correlates with lower finance and HR process costs as a percent of revenue, with additional gains when automation is layered on.
The 5 building blocks of sustainable G&A efficiency
1) A cost model that shows what work you’re paying for
Many organizations can report G&A by function, but not by service or activity. The unlock is building a transparent model:
- service catalogue (what finance/HR/IT/legal deliver)
- demand drivers (what triggers work and volume)
- cost-to-serve (cost per invoice, hire, ticket, report, contract)
This makes “cost” actionable: you can manage volumes, not just budgets.
2) Standardization and policy simplification (the highest-leverage lever nobody loves)
Before automation: remove the exceptions.
- simplify approval layers
- reduce report proliferation
- standardize contract templates and terms
- tighten master data rules
This is where most “hidden capacity” lives.
3) Automation where it changes throughput, not just convenience
Automation should target repeatable, high-volume, rule-based work first, then extend to knowledge work where AI can reduce cycle time and rework.
But the sequencing matters:
- Standardize → digitize → automate → optimize
Skipping the first step is why many tech-enabled cost programs disappoint.
4) Demand management: treat support like a utility with governance
If business units can consume unlimited services at zero marginal cost, demand will always expand. Sustainable models introduce:
- tiered service levels (standard vs premium)
- clear eligibility rules for exceptions
- consumption visibility (who requested what, how often)
- chargeback or show back where it changes behaviour
5) Talent redesign (so productivity gains don’t evaporate)
Efficiency isn’t just fewer people – it’s different roles:
- process owners (end-to-end accountability)
- automation product owners (backlog + ROI)
- data stewards (quality at the source)
- “exceptions teams” for nonstandard cases only
This prevents work from simply reappearing in new forms.
A practical roadmap Operations teams can run
Weeks 1–4: Diagnose and quantify the value pool
- SG&A baseline and trend vs revenue (and by business unit)
- service catalogue + top 20 demand drivers
- cost-to-serve benchmarks for priority processes
- “complexity bill” (how much overhead supports exceptions)
Use external benchmarks as a reality check – especially given evidence that SG&A ratios have been rising across regions.
Weeks 5–10: Design the target operating model
- clean-sheet service design + SLAs
- transaction scale plan (shared services, workflow, straight-through processing)
- governance: who approves exceptions, and under what rules
- automation pipeline with ROI math
3–6 months: Execute in waves
Start with 2–3 workstreams where savings and service improvements are both visible:
- procure-to-pay
- hire-to-retire
- record-to-report
- IT service delivery (tickets, access, provisioning)
Metrics that prove you’ve broken the cycle
If you only track “G&A spend,” the cycle returns. Leading teams track a mixed scorecard:
- Cost: SG&A % of revenue; cost per transaction (invoice, hire, ticket)
- Speed: close cycle time; time-to-hire; procurement cycle time
- Quality: error rates; rework rates; compliance exceptions
- Experience: internal NPS/satisfaction for support services
- Demand: request volumes, exception rates, self-service adoption
And they align it to the CFO mandate: cost optimization remains a top executive priority, so proof has to be operational and continuous – not episodic.
Bottom line
Breaking the G&A cost cycle is less about “finding savings” and more about building a scalable operating system for support work – one that standardizes, manages demand, automates intelligently, and measures performance like an operation.
