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Reprinted from Keep the Joint Running.
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ManagementSpeak: Tell me what the problem is in this organization.
Translation: Tell me what the problem is in this organization, so long as it isn't me.
Because Steve Perry saw the problem with asking for the problem, he joins the KJR Club. |
It's fashionable these days to rail against the hierarchical
organization. Business pundits frequently claim the age of hierarchy is
over. They claim to have developed exciting alternatives, which they'll
sell you for a small fee.
Uh ... no. Far from being dead, hierarchical
organizational design continues to be inevitable for all but the
smallest organizations, and for a very simple reason: There's no other
way to sort out who ought to be responsible for what when coordinating
the efforts of a lot of people.
(Please forgive the clumsy construction. The
alternative was, "An organizational chart is the only way to organize
an organization," which is even worse.)
Hierarchy is the only way to organize an
organization because of what a hierarchy is: An outline -- a successive
decomposition of how to delegate responsibility for what a business has
to do to be successful. I'll believe hierarchical organizational
designs are obsolete when someone convinces me an outline is obsolete
as a way to organize thoughts.
This doesn't mean there's only one way to organize
a business into a hierarchy. Far from it -- how to organize the
hierarchy is a tough challenge.
At the large enterprise level, CEOs generally make
the first level of the hierarchy autonomous business units, and leave
organizing each autonomous business unit to the person running it
(otherwise the business units wouldn't be autonomous).
CEOs of less-than-giant businesses ... or of the
autonomous business units that comprise most giants ... commonly use
these as organizing principles when delegating responsibilities:
Business functions (some of which are better characterized as shared
services), product categories, customer segments, sales and
distribution channels, or geographical regions.
The tricky part, as anyone knows who has had to
design an organization, is that at most you can make use of two
organizing principles when figuring out the top level of the company,
one of which must be shared services (unless you want multiple,
independent and incompatible general ledgers).
Even with just one organizing principle, clarity
isn't absolute, because whoever is responsible for, say, the IT
organization (let's call this person you) has a fuzzy boundary
with whoever is responsible for Human Resources with respect to
questions like recruiting, employee policies, and training. Every fuzzy
boundary is a challenge because on the one hand, you want to tailor
everything to fit IT's specific requirements while on the other, the
head of HR will focus on the importance of uniform standards.
With two organizing principles it gets
interesting. If, for example, you delegate some responsibilities based
on the principle of shared services and others based on that of
customer segments, determining who is responsible for (for example)
teenage consumer customers (customer segment) needs the authority to
make branding decisions, but so does whoever is responsible for
marketing (shared service).
Now imagine a company organized into shared services, customer segments, and
geographic regions. Figuring out who does what when positioning the
company for its European teenage consumer customers would be unnerving.
In effect, everyone is responsible for everything. Executives, even
with the best of intentions, will have little recourse but to fight
over turf so as to control the factors that affect their ability to
succeed.
So stick with shared services plus one other
organizational scheme. Everything else will be handled at lower levels
of the hierarchy. So far, nobody has developed a superior alternative
for organizational design.
For decision-making? That's another story.
View the organizational hierarchy as software designers view an
object hierarchy. Each organizational unit is a black-box. Every other
organizational unit interacts with it exclusively through well-defined
interfaces that define the inputs and outputs.
When a decision isn't completely within the domain of a single
organizational unit, it flows to a higher-level organizational unit for
resolution according to a well-defined governance process. Decisions
flow up until they reach an executive who completely owns them. That
executive makes the decision and sends instructions back down the
command hierarchy.
It's the sort of approach that looks great in the PowerPoint. Here
in the world, it keeps those with the deepest knowledge and clearest
view away from the most important decisions. Instead, the person with
the right authority makes them.
It's this meaning of "hierarchy" -- hierarchical
decision-making, not hierarchical organizational design -- that's
supposed to be dead, replaced by collaborative, informal networks of
whichever employees are most qualified to handle the situation.
Executives who prefer the hierarchical decision
model must distrust either the expertise, judgment, loyalty, or
willingness to collaborate of those closest to the action.
Which brings up the question: Why are these executives hiring and keeping people like this?
Robert
Lewis is president of IT Catalysts, Inc., a consultancy focused on
improving IT organizational effectiveness and integration with the
enterprise. Contact him at
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.
Copyright 2009, IS Survivor Publishing, all rights reserved.
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