Extract from my book: “Forty-five and gaga!”
During the eighties and early nineties it became fashionable to restructure into flatter organizations. Many terms have been used for this process including downsizing and the more interesting rightsizing. One of the more amusing terms I have come across was the “alternative career enhancement programme”.
Sometimes it has involved the downgrading of directors responsibilities into what are described as “key customer facing roles”… “designed to raise the importance of the customer”.
This “raising of the importance of the customer” sometimes has the effect of keeping a job for the senior manager, but removing the person who knows how to do the job! This scenario does raise some interesting issues.
Why remove the person who knows most about the customer and replace him with someone who knows little about his business, issues and needs?
Why was the customer not already important?
Why not develop and empower the person who knows most about the customer?
More usually, though, the downsizing process has involved the large-scale removal of middle and senior (= expensive) management.
Let us consider for a moment, how companies used to be managed and how senior managers learn the skills of effective decision-making.
Employees used to progress up their organizations through a two-way process. They became proficient at their current level, through actually carrying out their job, or “practising”. This practise enabled the employee to develop the skills necessary to ascend to the next level up the structure. Whilst practise does not necessarily always make perfect, it does in most cases lead to an improvement in skills and capability.
The complementary part of the process comes from the levels above. Organizations with an eye on the future and with a desire to improve their overall capability put in place a process for succession planning. This required for skills to be transferred downwards through the organization. This ensured that, if one manager of whatever level was promoted, moved to another division or left the company, someone else would already have developed the necessary skills and knowledge to take on the more senior role.
Let us also consider the importance of decision-making.
As can been seen from Structure 2, the importance of a decision can often be measured by the cost of a mistake or bad decision.
A general employee who decides to buy a box of paper clips from the local stationers, where the cost may be ten percent more expensive than the supplier chosen by the company’s purchasing department, may cost his employer a few pence; a low cost mistake.
A board director, who commits to building a new factory just before a serious downturn in sales, will cost the company millions; a very high cost mistake.
It, therefore, follows that employees need to develop the skills necessary for good decision-making. They should be forgiven for mistakes and encouraged to learn from them. As they rise up the organizational structure, they should be introduced to ever more complex and important decisions.
But, the world has moved on. We now have flat, lean, responsive organizations. I wonder…..!
Simply removing the middle and senior managers does not necessarily make an organization flatter and more responsive. It can often lead to a situation where the company has fewer levels in the hierarchy, but there is a huge gap between the Junior Manager level and the Main-board. Far from being flatter, it has merely introduced a vacuum.
I refer to this gap as the “incompetence gap” and it raises a number of major issues.
There is now a huge mountain to climb for any junior manager who has ambitions to rise to the top.
Each member of the board of directors has so many direct reports that he has not the time to devote to coaching them and assist with their development. How, therefore, do they gain the experience necessary to become skilled decision-makers should they, somehow, manage to climb to the top?
In addition to the development issues, the organization is now very exposed. Those people with knowledge of how things actually work and the experience to spot trends or indications of potential problems are no longer with the company.
In order to try to alleviate this issue, companies must now rely on automation. But who now has the experience and knowledge to design the automated systems? Who will build-in the rules needed to pick up on inconsistencies or potential problems?
Consultants and Interim Managers.
If the company is fortunate, it will find external consultants or interim managers with good knowledge of their environment. Perhaps even the very same senior managers they recently “let go”!
Consultants and interim managers can also prove extremely helpful when the organization experiences a sudden upturn in its fortunes.
If it has been operating “lean”, it will be faced with the dilemma of how to provide the service or deliver the goods required when business volumes suddenly become much greater that the norm in recent months or years. Fortunately there is a good pool of consultants who can be brought in at short notice to assist with the peak workload until such time as the peak is passed.
If the upturn requires a new infrastructure or department to support the increase in business or requires a change of culture or mode of operation, an independent transition and transformation leader in the guise of an Interim Manager can be brought in to manage this process. The Interim Manager can remain in place until such time as the necessary changes are implemented, understood and able to be handed back to existing staff, or until such time as a full-time manager can be recruited.
The flatter organization that works!
So how can an organization really make itself more customer focused, achieve faster decision-making for its customers and develop its more junior staff to become more valuable employees capable of taking on higher value decisions?
Structure 4 is a simplification, but serves to highlight a truly flatter organization structure.
Competitive pressures require overheads to be minimised. Yet, as we have seen, an organization cannot afford to simply dispense with levels of hierarchy. Few organizations today, therefore, can afford the luxury of pure managers
(= overhead) The senior lead worker in the structure above, who may be a senior or middle manager, must be a “do-er” as well as being the manager to lead and develop his team.
Key to the success of this flatter organization is “empowerment”.
The senior lead worker must transfer his skills, experience and knowledge to his co-workers and team members. This will enable all members of the team to be capable of making decisions within the scope of their experience and newfound knowledge.
The senior leader of the team is available to assist his team with decisions beyond their experience or competency. But this is as far up the organization as most decisions should need to go.
By including the most appropriate senior manager in the team and removing the hierarchy between him and lower level employees, decision-making time-scales are significantly reduced.
Junior employees benefit from having more exposure to the decision-making thought-processes of experienced senior managers. They, therefore, are able to take on more responsibility for decisions within their area of competence, which develops faster than under the multi-tiered organizational structure.
The senior team leader benefits, as he remains closely in touch with reality (= his customers) and so is better placed to understand what is really required from his organization.
But the real beneficiary of this approach is the customer. Whether he is from another internal department or an external purchaser of product or services; he is now dealing with staff better qualified to respond and make decisions to better serve the customer.