With a shameless reference to Gary Hamel’s interview with Peter Day which I blogged on last week (the link is at the bottom of this blog), I want to explore a different approach with regard to organisational structure:
What happens if we think about organisational structure
as a means of communication, and not just control?
As an aside, I suspect that for most of us, the control aspect of organisational structures is questionable, both in terms of its effectiveness…
- Anyone who’s worked in a corporate for any period of time will recognise that organisations are not managed in that pyramidal manner but as a result of relationships, influence and expertise which are far more intricate than the structure would have you presume…so what we have is a mirage of control rather than anything that is substantiated
…and perhaps also in its ability to stop bad behaviour…
- Talk to anyone in Retail Banking about fraud committed by employees and they will tell you that it’s going up, not down. That’s despite the most stringent controls, security and vigilance ever known in the sector…and most interestingly, despite complete clarity as to the consequences and in general, increasing evidence that you will get caught.
….and the downsides are considerable, among them, a stifling of innovation and creativity whilst it travels up and down through layers of vested interest.
S0, what does a span of communication do for an organisation which might be interesting and valuable:
- Gary Hamel uses the example of a subsidiary of GE where the numbers are 400 employees to one supervisor (another example is WL Gore’s strategy of operating units of less than 250 people), creating an incredibly flat structure where the key variable is what is the limit of my effective communication range…rather than the creation of a deep, highly layered organisation. The latter is less attractive as the potential for mis-communication is much greater as it passes through different levels of hierarchy.
- Similarly to information flowing downwards, innovation flowing upwards has much less distance to travel. The resistance caused by entrenched attitudes and the depressed state of the middle is removed. There is more pressure on what’s left of structure to be more effective in making decisions quickly and effectively.
- As with any direct line of communication, there is no longer any doubt as to whether the message has been received or not. If you think about the amount of time spent in organisations re-delivering messages which have either not be received or not understood, we’re talking about a lot of lost productivity.
Control is clearly important in any organisational structure. The example which Hamel gives of a Brazilian company which does not restrict expenses in any way at all is interesting however. In this business there are no policies as regards expenses. You can travel whatever class you like and stay where you want to stay…but all expenses are attributed and published for all to see.
Changing behaviour through peer group evaluation and pressure is perhaps a more potent way of control than the traditional route.