3.1 Organisational Structures

Team understanding of customer requirements
Co-operation between teams and departments
Workflow between teams and departments
Team / department objectives aligned across organisation
Decisions communicated effectively

The purpose of this section is to give you an understanding of how effective organisational structures work and how to develop and implement strategies to improve overall performance. As you work through the section content think about the issues and challenges you might face when trying to gain co-operation and seamless integration between teams and departments. You can also use what you have discovered in this section to reflect on, how matters could be improved by encouraging existing teams and departments to work more collaboratively with others. You will be able to record your thoughts and examples in the Reflection Note at the end, but you may find it useful to write them down as you work through the content.

So do the organisational walls and ceilings that allocate people to departments, divisions, grades and professions constrain how people work together, creating separate silos that put barriers in the way of doing a good job? Or do people collaborate across different tasks to create a seamless flow of work?

Of course some demarcations may be necessary, reflecting different bodies of expertise and knowledge. But this shouldn’t lead to fragmentation: different groups within an organisation should intertwine naturally in ways that help everyone understand other people’s jobs, professions, specialisms, priorities, problems and vision.

Hierarchy and silos

Many organisations appear to be structured around three assumptions:

  1. Hierarchies are just common sense: you need somebody to be in charge.
  2. People at the frontline are of lower status and less motivated so they can’t be trusted to make decisions or manage their own work.
  3. Other ways of organising may be fine for some companies but they’ll never work here.

Do these assumptions ring true in your organisation? Or is your organisation one of a growing number that view hierarchy as a source of waste, inertia and employee disengagement?

For these latter organisations hierarchy is essentially the embodiment of distrust. Management layers inevitably tend to put distance between decision-making and the frontline, disempowering and diminishing the voice of those at the lower levels as well as creating an implementation gap. Hierarchy breeds caution amongst managers, encouraging decisions to be delegated upwards with consequent loss of productivity.

Vertically organised structures also create barriers and even conflict between different functional areas. Managers focus on achieving their own KPIs and defending their own budgets and areas of control. There is no ownership of the process as a whole because each function completes its own task and then ‘throws it over the wall’ to the next department. Collaboration between departments is disincentivised because it consumes time and resources not measured in targets and performance indicators. Too often the result is production bottlenecks, stockpiling, recurrent quality issues and lack of joined-up customer experience.

This undoubtedly causes frustration in resolving day-to-day issues that require a process-wide perspective. More importantly it also weakens the strategic direction of the organisation as a whole because there is no clear alignment between its vision and strategy on the one hand, and the drivers, policies, targets and incentives that shape behaviour at departmental, team and individual levels on the other.

Conflicting Departmental and Team Goals

Silos also have particularly negative effects on the capacity for innovation. While many organisations are beginning to recognise the strong connection between innovation and diversity this does not appear to be reflected in the relatively robust walls and ceilings that form their organisational structures. In all organisations what you measure tends to be what you get as far as management performance is concerned, and this can create perverse incentives. Managers can appear to have demanding operational targets but narrowly defined performance measures may actively discourage them and their teams from active engagement with the organisation’s innovation agenda.

In consequence management culture and practice can easily become dominated by day-to-day transactional concerns, and this is reflected in team meetings and even away-days. Centralised decision-making and lack of discretion over budgetary spending is also likely to support conservatism rather than experimentation in decision-making.

Hierarchy can also drive people into roles for which they are not well suited through unilinear promotion and career development pathways. An excellent technical specialist may be promoted to a line management position in order to retain her or him within the organisation, irrespective of whether or not they have any aptitude for, or interest in, leading people. The consequence is that managers are taken away from the areas in which they contribute most to the organisation and teams acquire ineffective or positively dysfunctional leadership.

How effective organisational structures work

In contrast, in flat structures the organisation either has no management layers or the chain of command is very short. Flat organisational structures combined with employee self-organisation are associated with:

  • better communication and relationships between different roles;
  • simple, faster decision making processes;
  • versatility and willingness to change.

Clive Hutchinson argues the case for “strengths-based management” based on his experience of leading transformative culture change at Cougar Automation – in short, letting people do what they’re good at, and dismantling unproductive mechanisms for control and supervision. During our own work with several hierarchical organisations we have encouraged them to think about the different types of function that managers are required to deliver, each of which could provide the basis for a career path responsive to individual strengths. For example:

Line management focuses on people through, for example coaching and team-building, but is not the same as task or project management.

Strategy management focuses on strategy and the strategic alignment of activities, filling the gap often left by a dominant focus on transactional issues.

Specialist expertise contributes high levels of technical proficiency to teams and tasks, and brokers relationships between different parts of the organisation when required, but is separated from line management.

Project and performance management harnesses the energy of both permanent and ad hoc teams to achieve specific outputs to high standards in a timely and cost-effective manner. In a trust-based culture it focuses on mentoring rather than micro-management.

Of course, some individuals will combine two or more of these different roles depending on aptitude and context.

Two other factors also need to be brought into the equation:

  • Self-managed teams which achieve high performance because they are trusted to use their discretion, collaborate effectively and generate continuous ideas for improving the way they work. Team leaders (if and when required) emerge because of their expertise and experience relating to the task and their ability to motivate colleagues.
  • Communities of practice reflect the interdependence and complementarity of different occupational groups, breaking down silos and demarcations. Communities of Practice are grounded in relationships built on informal networking and knowledge exchange, and provide the basis, as well as the established relationships, for creating ad hoc interdisciplinary project teams when required.

The figure below suggests an alternative approach to hierarchical and horizontally segregated management structures. In overcoming the limitations of hierarchy discussed above, the approach is designed to achieve enhanced leadership, flexibility, communication, responsiveness, productivity, entrepreneurial behaviour and innovation.

The Fluid Organisation

The approach represented in this figure is purely conceptual and must be contextualised within each organisation through active employee involvement.

In summary, employees do not report to a single line of command but work with different managers for each of the roles and functions identified above.  While everyone has a ‘home team’ including a line manager responsible for their coaching and personal development, employees learn to navigate towards the person best able to address each specific issue.

Control in flat companies lies in mutual agreements between self-managing, self-organising and self-designing teams, and employees who take personal responsibility for satisfactory outcomes. Leadership is co-created through dialogue with and between employees; leaders nonetheless tend to play a key role in espousing collaboration as a core value and in stimulating empowering and enabling behaviours amongst their colleagues.

In 2007 Brian Robertson, a company CEO, devised and trademarked the concept of holacracy. The term is becoming increasingly widespread in management vocabulary but in practice there are a diverse range of approaches that have emerged from different types of organisation.

For many organisations, the aim is not to erase hierarchies entirely. Rather they allow hierarchies to form organically and fluidly to meet the needs of specific circumstances and opportunities. Flat organisations rely on decentralised approaches to management and require a high degree of employee involvement in decision-making. They empower employees, share information, break down divisions between roles, share competencies, and use team or organisation-wide reward systems.

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