Why the Org. Chart May Not Cut it Anymore

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organizational structure of most for-profit companies – the one that involves a litany of org charts – is increasingly outdated.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.


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