Organisation Structure and Management

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Our industry is facing a major breakpoint – a dramatic shift in the market that makes current winning strategies obsolete.

In the future, the most valuable opportunities will be those where leverage can be obtained by projecting and stretching existing competence into new areas. However, the success of this strategy to build on existing experience and resources and to mobilise an organisation depends entirely on its corporate culture.

Company Culture

Our organisational structure most closely resembles Charles Handy’s description of ‘Power Culture’. The strength of this type of organisation is the “ability to move quickly and react well to threat or danger”. Throughout our history, the company has maintained steady growth by “spawning” other organisations and other “spiders”. Indeed, each satellite company is managed as a local company where the Branch Managers have total responsibility for profitability and a share in that profit. The result is a group of autonomous companies each with its own culture, strongly affected by the local culture in which it operates.

Senior Managers assumptions are very much along the lines of McGregor’s ‘Theory Y’, encouraging employees to become innovative, seek responsibility, make decisions and react to opportunities. Individuals can help corporations stay ahead of a changing environment by moving their organisations beyond what they already know, into the more uncertain realms of innovation.

The Dilemma

Although it is obvious that the organisation must be innovative to survive, we must also have formal control systems which, in themselves make innovation difficult. Because of its very nature innovation involves unpredictability, risk taking and non-standard solutions. If there was a guaranteed way to promote innovation, as there is to manage cash flow, most organisations would adopt it and there would be little competitive advantage gained. It is precisely because of uncertainty that a competitive advantage is possible for innovative firms. Our aim is to create an environment where everyone recognises the importance of challenging the status quo, design systems that tolerate some failure, encourage risk taking and provide resources and open communication.

Empowerment

As far as we are concerned the case for empowerment comes from business needs that are central to the success of the company, fast response to customers, strong cross functional links at multiple levels and the need to take opportunities that are too local, too fleeting and too many in number to permit a centralised decision-making process.

However, a major dilemma has always been, exactly which decisions should be taken by employees? If decisions are held too close to the top, employees will be hampered in fulfilling their responsibilities and exercising their authority in a timely manner. On the other hand, if too many decisions are pushed too far down the organisation, it runs the risk of becoming disjointed with different parts of the whole coming into conflict. At some fundamental level, the answer must be ‘whatever decisions the employee thinks at the time it is appropriate for them to take’. Without this level of discretion employees cannot be said to be truly empowered. It must be up to the employee to decide and what must be pushed up the ladder to higher management. There is a certain amount of risk attached to this. The employee is more exposed and the manager less in control. However, this is the nature of an empowered organisation, in many ways it is the antithesis of the traditional management hierarchy.

The Advantages of an Empowered Workforce

We have always considered our primary source of competitive advantage to be our people. When value is delivered through information. Personal interaction or group work, the human element is of paramount importance. The only way to tackle the ‘new world order’ is to have everyone giving 100% effort in the right direction all the time. This combination of effort and alignment rarely results from a top down management model. Only a system of distributed decision making will provide the flexibility and motivation for our people to maintain peak performance levels.

When the organisation’s overall direction is clear and its overall structure and resource base are adequate for its needs, then an empowered workforce with responsibility and authority for most day-to-day decisions can have the following advantages:

  • Better Customer Service. Not only are our employees in touch with customers able to make decisions themselves and provide an appropriate response but they also give customers the impression that the customer is dealing with someone who has power and influence in the organisation.
  • Flexibility: Empowered employees are ready to respond to changes as they arise
  • Speed. They know responsibility for outcomes rests with them therefore they take action swiftly to solve problems.
  • Formation of important crossfunctional links. Without having to raise most operational issues up the hierarchy, they are free to make appropriate horizontal connections. Cross-functional teams formed and reformed as necessary and because these links were not officially resourced, they tended to be efficient. Benefits came from not being on the team itself, but from what the team contributed. If a link ceased to add value, the participants would drop it.
  • Morale. Most feel better about their work because they know they have more control over it. Of course, individuals ‘high morale’ if widely shared, can give the organisation a positive quality that is visible to all stakeholders.
  • Compensation for limited career path. Many employees now face the prospect of limited advancement given the current state of the industry and the tendency towards flatter hierarchies. Broadening their responsibility and authority is one way that employees may find their roles challenging and rewarding enough that promotion ceases to be their only criterion for remaining.

The Other side of the Coin

Most of the potential difficulties associated with empowerment are the converse of the advantages.

  • Greater potential for chaos. The same local action that can lead to increased customer service can also lead to conflicting messages being given to customers and across departments often resulting in a co-ordination manager being appointed.
  • Lack of Clarity. The flexibility and speed that resultfrom distributed decision-making are likely to lead to lack of clarity about who is responsible for what. Job definitions become less useful and people often find themselves under more pressure because there are fewer limits to their responsibilities.
  • Breakdown of Hierarchical Control. The emergence of more cross-functional links often signals the breakdown of the formal hierarchy for the carrying out of many decisions. Control ends up being shared, not only across hierarchal levels but across functional boundaries too. Cross functional teams may do an excellent job of problem solving but managers with ultimate responsibility are likely to feel a real loss of control which they may reject as too risky.
  • Demoralisation. Although empowerment seems attractive to many people, we have found that not every employee wants the responsibility that comes with it. Managers have the habit of assuming everyone is like them – desirous of more power and the concomitant rewards. However, some employees would prefer not to be burdened with additional authority and the decisions that come with it. These individuals can become seriously demoralised if they are forced to take a more active role in the management of the organisation.

Conclusion

When faced with a challenge, most individuals respond positively. Psychologists believe it brings out the best in people. On the other hand, when faced with a crisis, people can go one of two ways. They can emerge as strong individuals who meet the crisis or they can become cowering wrecks under its enormity.

One advantage of the crisis is that Managers have the full attention of all the players. The shock of this pandemic has opened previously closed minds. People quickly became aware of the forces and need for change. Another advantage was that our direction was clear. To save the business only a few value-creating ideas were relevant. There was little risk in leaving any resistors until last because of the effort built up organically, gradually invading the organisation, before taking it over entirely. Any resistors were reduced to a shrinking group in the face of the accelerating bandwagon.

By Annette Bell, Bell Group Director & Co-Founder

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