Why the Org. Chart May Not Cut it Anymore

January 23, 2015

Editors Note: This is our first guest post, and I’m thrilled to  welcome Megha Pandit Rao and Alexandra Hughes. As so much of what we’ve  spoken about in some of our earlier posts here relates to Employee  Engagement, we put our heads together and had a think about some of the  failings of the org. chart.

Why the Org Chart May Not Cut it Anymore January 14, 2015

Structure has a profound effect on employee behaviors, attitudes, and  engagement, all of which are inextricably linked to customer  satisfaction. So with more than 70 percent of American workers not engaged or actively disengaged in their work, it’s a wonder more companies aren’t examining their structure and asking, “Is this really working”?

For many, the answer is, it isn’t.

The traditional organizational structure of most for-profit companies  – the one that involves a litany of org charts – is increasingly  outdated. Companies with an overly matrixed or hierarchical structure  are often unable to compete with the agility and flexibility afforded to  organizations opting for a less traditional structure.

An alternative to a hierarchical model is one that embraces  self-governance to some degree, meaning employees have greater control  over their roles, and utilize models such as John Kotter’s Accelerate system.  In a variety of instances, organizations that have shifted to this  approach have seen a parallel rise in a variety of key performance  indicators, such as higher levels of innovation, employee loyalty, and  customer satisfaction. They’ve also experienced lower levels of misconduct and stronger overall financial performance. One recent example made popular by the New York Times is that of the Valve Corporation,  a private computer software company of about 300 employees. Valve  operates with a completely “boss-less” structure and an estimated net  worth of $2.5 billion.

Ultimately, high-functioning organizations that take steps towards  greater strategic agility and self-governance, and less hierarchy, can  and do see increases in engagement, productivity, and profit.

So what can “super structures” gain from adopting a less controlled,  more self-governing structure? And what are the aspects of the less  traditional model that contribute to an organization’s success? In our  reading, research and experiences, we suggest five areas in which less  traditional models excel, and from which traditional organizations can  really learn:

  1. Realizing the business value of personal projects. Giving  employees room to develop and pursue personal passion projects that are  relevant to their employers’ business can and do lead to new and  innovative products and ideas. The transition from skunk works project  to sustainable product that drives business value is arguably more  challenging when the idea emerges from deep within the organization.  A  more dynamic organizational structure ensures continual churn, and a  clearer line of sight to ‘the surface’.

  2. Shedding layers of rules. Put simply, the larger an organization  gets, the more complex it becomes. Yet, an abundance of rules can make  employees feel like they’re working for a bureaucratic taskmaster, not a  revolutionary company. Fewer rules across the board – from hiring to  submitting an expense report – will help to increase transparency, embed  autonomy, and breed dexterity.

  3. Hiring outside the box and celebrating individuality. Smaller,  loosely-governed companies are often more open to hiring unconventional  candidates that don’t fit the mold. In fact, many prefer candidates who  are smart but unskilled, knowing that they have the capability to learn  as they go and still be an asset to the organization. The  high-functioning organization of the 21st Century is a continually  learning entity. Hierarchical structures do not prohibit this, but they  naturally invite siloed learning. 

  4. Understanding that failure might be an option. Maybe it’s because  so many of today’s start-ups fail that there is a certain level of  acceptance with this, but acceptance of failures lessens the burden to  be perfect and ensures that employees aren’t afraid to innovate at the  risk of not succeeding. Having a non-traditional organizational  structure allows you to diversify risk, and tolerate failures in a way  that avoids catastrophe for the whole.

  5. Asking why and why not. Simon Sinek started with Why – to get to  the heart of purpose, in a way that frames everything we each do. That  is hugely powerful. If we align on the greater ‘why’ of the organization  and of our roles, wouldn’t we naturally become more efficient as a  result of that shared understanding and focus? Similarly, the ‘why not’  can be just as critical. If employees aren’t able to question the things  that are happening around them, they can’t be the best organizational  citizens. We suggest that this should include the very structure within  which they find themselves working. For the health and future of the  company, leaders should empower employees to question whether there are  better/faster/safer/more effective ways of doing each and everything  they face. 

All of this sounds complex. And, it is. Not every company can embrace  all of these tenets, and hierarchies are typically ill-suited to handle  complexity unless employees are infallible, and typically that’s not  the case.

Often the first step is a small one, like eliminating paper-laden  approval processes. Wherever you begin, remember that those org  chart-driven structures just don’t cut it anymore.

Thanks for listening,

AH, DT, and MPR

About the authors:

Alexandra Hughes: Alexandra Hughes, MPS, has a decade of experience  in health communications, social marketing and behavioral science,  advising government agencies, non-profits, and Fortune 100 companies on  issues ranging from breast cancer and childhood obesity, to vaccine  hesitancy and reproductive health. She provides counsel for some of  Ogilvy Washington’s key clients, including the Centers for Disease  Control and Prevention, the National Institutes of Health, the U.S.  Department of Health and Human Services, and Merck & Co., Inc.  Alexandra holds a Master’s degree in Public Relations and Corporate Communications from Georgetown University.

Megha Pandit Rao: Megha is an organization development and human  capital specialist with experience across financial and professional  services, healthcare, hospitality, restaurant services, luxury brands,  and nonprofit and government agencies. Her previous work included  redeveloping an organization’s recruitment, selection, training, and  performance management systems. Her current role with MSLGROUP involves  creating targeted, engaging and effective internal communications that  empower employees to be their best selves at work each day.  Megha holds a Master’s degree in Industrial and Organizational Psychology from New York University.

Previous
Previous

Sex and Serendipity

Next
Next

Social learning