The growing alternatives to hierarchy are not necessarily the same as the end of management. Management can certainly play a role in networked structures of independent teams. But the nature of the job changes to enable work and not control people. One of the more interesting discussions in this area of the evolving structure of organizing work is the question on decision making.
Imagine. You have no managers, you own defining your responsibilities and aligning with your peers, you can spend money, buy the tools you think you need to do your work. You have no title, you do not get promoted and even your annual salary increase is set with no management intervention. Fiction? We’re seeing more and more organizations experimenting with self management. One very interesting example exists since 1970, employs hundreds of employees, sells for approximately $350 million and holds 40% of the US market for… ingredient tomatoes paste and diced tomato. And yes, there is a lot to learn from this organization on the future of work. We’ll get to that.
First of all, it is important to understand that alternative structures to hierarchy are not necessarily the same as the end of management. A recent post, Hierarchy@Work – have we reached the limit? covered alternative organizational structures, attempting to deal with the limitations of the hierarchical ones most of us work in today. Many managers begin to see that what got us here will not necessarily enable the future we are trying to create.
This is not to say that the alternative to hierarchy is a flat structure, and definitely not the end of the role of managers. Management can certainly play a role in networked structures of independent teams. But the nature of the job changes to enable work and not control people. One of the more interesting discussions in this area of the evolving structure of organizing work is the question on decision making.
Traditionally, we think of decision making as one of two possibilities: top down or consensus. In a top down decision making model, when we run into a difficult decision to make, or when we think we do not have the authority to make it, we raise that decision up to the level above us. That was originally the essence of the hierarchical structure – the manager knew, the workers executed. The value of this method is that someone makes the decision and we can move on. The downsides ofcourse emerge in today’s world, where the manager no longer knows all there is to know and many topics require coordination between various areas of the organization. You’re familiar with the issue of decisions going up the chain to that level, where the entire picture can be seen or authority exists across the right parts. This process takes time, coordination, maybe even organizational politics. And that goes against the need for the organization to be agile, quick, flexible, updated.
Alternatively, we try to make decisions in consensus. If you’ve tried to get there, you know this is a long and tedious process, at the end of which we usually beg for the decision to be made, whatever decision, as long as we can move forward… Or, we look for solutions half way, such where there is one decision maker but many people participate in the process, some form of combination between consensus and hierarchy. This does not resolve the bottle necks, only makes the process longer. And so we see more and more organizations trying to find an alternative way to make decisions. This is especially true where organizations attempt to organize with no or less hierarchy or managers. The idea of self management becomes one of the first topics requiring resolution. With no hierarchy, who makes decisions?
One common feature to many self managing organizations is the definition that decision making is in the hands of the individual, but that individual is required to go through a structured consultation process. What does that mean? That anyone can make a decision as long as they have consulted with those with expertise in the area or those affected by the decision. And yes, that includes spending money and even raising pay.
One such example is Holacracy. In this structure, the role of the manager in decision making is replaced by organizational processes. If in the hierarchical structure, an employee trying to resolve a problem will approach their manager, in Holacracy, he or she will attend a meeting to request the responsibility to solve the problem. This coordination meeting is meant to enable continuous improvement in the way the work is conducted. It’s uniqueness is in that it gives everyone the same voice and does not require unanimous agreement. In this way, Holacracy attempts to spread decision making throughout the organization, by allowing every individual to take on the responsibility to solve a problem, essentially making them the ultimate decision maker in their roles.
How does it work? The organization is structured around work and not people, with a very structured process to take ownership for a decision while listening to other people’s concerns. In the coordination meeting for that particular work circle, anyone can raise a stress point in the system they are responsible for and offer a solution. In the first round, participants may only ask clarifying questions to understand the problem and the proposed solution, but they are still not allowed to voice an opinion. The second round is the only round where people can speak freely. Each on in his or her turn can respond to the proposed solution with any back-and-forth conversation. Any response is allowed as long as it addresses the solution not the person. The idea here is to offer additional perspectives, consequences, changes that can make the solution better, anything the participants think needs to be considered as part of the decision. After this round, the person making the proposed decision may change their proposal, but they don’t have to. There is no additional discussion. The intent is for the person trying to resolve an issue to get to the best possible solution. They don’t have to consider everything they heard. Now the facilitator asks every participant if there is any reason why adopting the decision will cause that work circle damage. If there are still such objections additional proposals need to be raised to change the decision so that the issue will be resolved. In other words, you can’t “not like” the decision but you can be specific as to what would need to be adapted to make it work. At the end of this meeting, a solution is in place. Now take a step back and look at this process. Whoever experienced the issue in doing their work has proposed a solution and their entire work group now agrees it is feasible.
The most well known implementation of Holacracy is Zappos, a few thousand employees selling most shoes online, bought in 2009 by Amazon in a deal over a Billion dollars. 75% of Zappos customers are repeat customers. Another known example of Holacracy is the content company Medium, established in 2012 and well known to bloggers. Medium was valued last year at around 250 Million dollars. And notice this example, the office of the CIO Washington State implements this structure as it tests its implications on public service. Quoting from their recent blog post:
The Office of the CIO has been operating with the Holacracy self-organizing model for part of the organization since February of 2015. On July 1st the same year, a law passed that consolidates our office with two other organizations in state government now known as Washington Technology Solutions (WaTech). This transition provides a great opportunity for a Holacracy retrospective over the past five months and a kickoff for the next phase of Holacracy in Washington government.
Yet Holacracy is not the only non-hierarchical structure successful today. Many organizations are defining a non-hierarchical structures and processes for self management and decision making. And this brings us back to processes paste. Meet the morning star company from California, making processes tomato products. As mentioned, it exists from 1970 and is responsible for supplying 40% of the US ingredient tomato paste and diced tomoato markets, with industrial sales of approximately $350 million. And for the really interesting part – this company operates on principles of self management, or as their Organizational Vision states it:
For Morning Star colleagues to be self-managing professionals, initiating communications and the coordination of their activities with fellow colleagues, customers, suppliers and fellow industry participants, absent directives from others. For colleagues to find joy and excitement utilizing their unique talents and to weave those talents into activities which complement and strengthen fellow colleagues’ activities. For colleagues to take personal responsibility and hold themselves accountable for achieving our Mission and shaping the Tomato Game.
This organization believes that personal responsibility by each and every employee will bring about the organizational vision. The idea is that all employees are adults, while a hierarchical org structure causes us to behave as children, waiting for a responsible adult to make the decisions so we don’t have to be responsible for those decisions or their outcomes.
In this organization everyone can make decisions with regards to his or her own work, including spending money. All it takes is ensuring you’ve involved and agreed with whoever is affected by your decision, and consulted with those who have the knowledge and expertise in the area of that decision. How does it work? At Morningstar intead of having a manager, the employee is managed by the task itself. In other words, what drives the work is whatever it takes to get the work done and not whatever someone else tells you to do. Every employee writes up an annual letter of intent indicating how they will contribute to the organizational mission. And then, they are responsible to deliver, including whatever it takes to obtain the right level of expertise, training, resources, collaboration. This annual letter of intent also serves as the basis for agreements with the relevant circle of co-workers most affected by their work. This is an agreement process, which creates a coordinated work plan including deliverables, coordination and indicators, as well as any necessary procurement needed to make these happen. In this organization, there is no procurement department or signature authorizations but the employee knows that in order to buy something they need a business reason, including the right level of ROI. And they need to consult anyone with knowledge contributing to, or affected by the procurement decision. And if a few people purchase from the same source, they will meet to coordinate the purchase.
The entire idea here is that employees should have the authority to make decisions and no one has authority to stop decisions. Experienced employees will not veto a decision but are expected to serve as mentors, support and guide new employees in the decision making processes. Where agreements cannot be formed, they are brought in front of an internal arbitrator and, if necessary, in front of a panel of six co-workers. Only in rare cases do they rise up to the company’s president. Even compensation decisions are conducted with no managers, by a team of co-workers who review the summary performance reviews each employee completes for themselves and determine salary increases accordingly.
Morningstar is another example for an organization, who found alternative ways to make decisions without managers. Or according to them, to ensure each and every employee assumes the roles we typically associate with management: planning, organizing, coaching, teaming, tracking, managing agreements, resources, schedule. Managing responsibility. And making decision.
This might not work for everyone and every organization but it’s certainly food for thought. If the hierarchical structure in your organization is creating bottle necks, slowing down decision making, limiting the flow of information and work in the organization, maybe it’s time to evaluate what to do about the “how” work gets done towards your vision? Maybe structure management around work and tasks and not job titles and hierarchy? And ensure that at least in those key areas, where flexibility and speed of decision making is needed you have people who’s role is to manage the work and not manage the people? And ask ourselves once more, what do we really need to do so we can let go…