BREAKING OUT OF THE ORGANIZATIONAL STRUCTURE
- 1. ERIC L. BARRDOisGcuAssa nt
- 2. Limitations of a pyramidal structure Pyramidal structures were originally designed to manage poorly educated; ill-informed people who needed supervisors to tell them what to do and how to do it. But these days, high levels of education and access to information mean that such structures often negatively affect people’s behavior and motivation – and consequently organizational performance. The worst limitations of the traditional pyramidal structure are:
- 3. Vertical career progression Tending to be the only model for professional development, climbing the hierarchical ladder frequently becomes a system in itself. People may choose a particular career path simply to enter top-level management, even if it does not match their profile or skill set.
- 4. Command communication A top-down command mode, where orders are swiftly executed without being questioned, has long been accepted as the most efficient way to produce results. But by not discussing the expected results, alignment is achieved between the superior’s expectations and the action instead of between the action and the expected results. This communication style also assumes that people at lower ranks cannot contribute to strategies and objectives.
- 5. Company experience While experience is obviously valuable, length of experience and seniority have often been confused. The cost of promoting people into leadership roles mainly because they have been with the company for years has become unaffordable today. In addition, these days experience (like knowledge) can rapidly become obsolete and a killer of creativity and initiative.
- 6. Internal competition The traditional managerial principle puts employees in a competing mode, which can restrict and even discourage knowledge sharing and cooperation. This can be costly with a well-educated, informed workforce: by not bringing together its people’s knowledge and insight, the company misses out on efficiency and result orientation.
- 7. Silo thinking The traditional managerial role of centralizing information and being the sole point of communication between the team and top management is still embedded in the mentality of many managers today. This, together with reporting lines to one superior and the tendency of internal competition to create strong “allegiance” to the superior, automatically creates silos.
- 8. Obedience orientation With the quality of task execution defined by the superior, it is more important to be obedient and conform to the superior’s expectations than to display initiative and concentrate on results. These days it is a sheer waste not to raise the level of initiative and optimize all the skills and insights available in a well-educated workforce.
- 9. Delegation of tasks rather than authority and responsibility Traditionally, the manager retains decision-making authority and is often the “correcting” manager as well as the only judge of performance quality. But in trying to maintain their superiority, most managers tend to stifle others’ self-confidence, leading to lower motivation and efficiency.
- 10. Building on human potential These limitations block four key factors that modern organizations need from their people in order to take full advantage of their knowledge and skills – and thus ensure long-term profitability and sustainable company development. These are:
- 11. Building on human potential Alignment – a clear sense of the expected results and company values, with everyone convinced and engaged Insight – the process of transforming experience into action
- 12. Building on human potential Cooperation – the genuine sharing of insights and knowledge Initiative – improved efficiency through motivated, self-confident employees When these four factors come together, silos and the silo mentality disappear. This alone is worth the effort and will unlock additional efficiency and effectiveness. There is also improved alignment with results – exactly what companies wish to achieve.
- 13. New management structures needed The question is: how can companies break out of the pyramid structure and achieve alignment, insight, cooperation, and initiative? We believe the answer is through flatter, more flexible structures where managers are more like “hubs” that connect people and combine skills, managing through a network rather than a traditional hierarchy.
- 14. New management structures needed High-quality processes are needed for decision making and debate, as are new ways of assessing people to give priority to insight over experience. Barriers to cooperation must be eliminated, and working climates must foster self-confidence and provide breathing space to encourage initiative.
- 15. New management structures needed Implementing flat and flexible structures – An in-depth examination of corporate structure and functions was undertaken, and the number of hierarchical levels was reduced.
- 16. New management structures needed Inspiring management Programs were implemented to improve the leadership skills of managers, starting at the top level, as well as to reverse their role from “passive judge” to “committed developer”, and so make them responsible for the development of their people.
- 17. New management structures needed Long-term development With fewer hierarchical levels, fewer promotion levels are now available. Interregional and interfunctional moves were therefore enhanced to stimulate both personal development and organizational learning, and new roles were created that cut across traditional career paths. A talent pool was also developed in line with the company’s development needs.
- 18. New management structures needed Dynamic compensation Also in response to the flattened structure, horizontal remuneration models were developed that allowed increased remuneration even without promotion.
- 19. New management structures needed Lifelong learning Always held a strong belief in the need for continuous learning, both through internal and external programs. SOURCE :IMD - www.imd.ch BREAKING OUT OF THE PYRAMID Page 5/6