Transitioning People Through Constant Change

This post in the series “Kill the Hierarchy” I explore how flattening the organisational structure will increase employee activity and the benefits that will bring.

For an organisation to survive and thrive in a world of constant and uncertain change, the organisation has to be one in which leadership is important, but MORE important is a collaborative workplace in which transparency and creative freedom reign over hierarchical boundaries. This enables innovation, creativity, experimentation, rapid decision-making, agility and employee ownership, engagement and influence. There is widespread autonomy and everyone leads.

No one ever did anything awesome or great just because they were told to!

The ‘Kill the Hierarchy’ model shown the diagram below, illustrates the changes needed to move to a flatter structure, and it is these changes that we shall be exploring in this series of posts.

Active employees

Active employee involvement increases productivity and profitability.

A flat organisational structure empowers employees. When employees take on a greater role within the organisation, they become more personally motivated to succeed and more active in the organisation.

A flat organisational structure enables all employees to participate in a wide range of activities. When employee voices are heard and their ideas considered, they are more likely to actively share ideas and opinions without the fear of being shut down.

When there is a lively exchange of ideas and thoughts, creativity and productivity will increase.

When we are living in a world in which change is rapid and dynamic, the bureaucracy of an entrenched hierarchy will just slow an organisation down and leave it vulnerable. Competitors with a flat structure, where employees actively apply their skills where needed, and are able to shift effort quickly to match market demand, have a distinct advantage. Employees themselves can shift efforts to where they are most needed for the organisation to succeed.

Hierarchy stifles

When an organisation is looking for creativity, innovation and experimentation, it will find that this will be stifled by the hierarchy everything is top down. Creative and innovative ideas that come from the lower levels of the organisation have to work their way up the chain of command seeking approval for implementation. The chances are that the further the idea moves away from the source,  less is the understanding of its merits and real value. The managers up the chain of command do not have the understanding of the context in which the idea was generated and the problem it was trying to solve or the opportunity it was trying to seize.

As ideas move up the chain of command the likelihood is that due to a lack of understanding and comprehension, the idea gets rejected and the innovation is dead in the water.

Hierarchy kills employee activity that will further the organisation.

Vanderbilt professor Dave Owens calls these chains of command “hierarchies of no”. He insists that standard organisational structures contain natural constraints against innovation.

Whilst organisations like W.L. Gore have an advantage in that they abolished the hierarchical structure from company inception, even companies that have existing hierarchies can develop systems to encourage employee activity.

One such company is Rite-Solutions. Each employee is given $10000 with which they can invest in the internal ideas stock market. Anyone can propose an idea and list it as stock. The rest of the organisation gets to invest in it if they think it is a good idea. Ideas that gain momentum are given actual funding to develop them into real projects.

At Rite-Solutions they have found a way to avoid the hierarchy of no. The power to give an idea a red or green light is distributed across the organisation regardless of hierarchy.

However, is this just not a work-around to overcome the restrictions and confinement that a hierarchy brings? Flattening a hierarchy is a massive undertaking but the benefits far outweigh the effort involved. The extent of the undertaking should not deter organisations from seeking to establish an environment and a flatter structure in which ideas get a change to breathe.

Life at Valve

Valve Corporation is a leading video game developer and digital distribution organisation. It is known for its software distribution platform Steam and games such as Half-life and Counter-Strike.

Valve does not reveal its profitability but Forbes estimates Gabe Newell, cofounder and CEO, to be worth $5.5 billion (11/19/2017).

Apart from its success, Valve is also known as one of the best examples of a large organisation that operates a flat organisational structure.

Every employee is encouraged to be active and assume many roles.

The following are extracts from the Valve Handbook for New Employees which highlights that encouragement.

“We want innovators, and that means maintaining an environment where they’ll flourish. That’s why Valve is flat. It’s our shorthand way of saying that we don’t have any management, and nobody “reports to” anybody else. We do have a founder/president, but even he isn’t your manager. This company is yours to steer—toward opportunities and away from risks. You have the power to green-light projects. You have the power to ship products”.

“There’s no red tape stopping you from figuring out for yourself what our customers want, and then giving it to them”.

“We’ve heard that other companies have people allocate a percentage of their time to self-directed projects. At Valve, that percentage is 100. Since Valve is flat, people don’t join projects because they’re told to. Instead, you’ll decide what to work on”.

“Deciding what to work on can be the hardest part of your job at Valve. This is because, as you’ve found out by now, you were not hired to fill a specific job description. You were hired to constantly be looking around for the most valuable work you could be doing”.

Roles at Valve are fluid. No one has a title. Employees are active in taking on roles that suit the work needed by the organisation. Look at the credits Valve puts in their games – there are no titles – just a list of names in alphabetical order.

Flatter not flat

Organisations like Valve have started out flat and scaled accordingly. For large organisations with entrenched hierarchy, becoming totally flat may not be realistic. However a flatter structure is possible.

Some form of hierarchy may exist but flattening the hierarchy to reduce the bureaucracy is crucial.

A flatter organisation focuses on communication and collaboration, empowerment and autonomy.

Jacob Morgan, author of The Future of Work, writing for Forbes describes the crucial elements required in order to have a flatter structure.

“The first is a robust set of technologies that act as the central nervous system of the company. These technologies help make sure that employees can collaborate and access each other and information anywhere, anytime, and on any device. The second thing this model requires is an understanding by executives and managers that employees don't need to work at your company, they should want to work there and as a result everything should be designed around that principle. The third thing that is required is an understanding that managers exist to support the employees and not vice versa. This also means that senior leaders focus on pushing the power of authority down to others instead of pushing down information and communication messages. The fourth and final thing I'll mention about this model is that the organization must accept that the way we work is changing and must therefore be comfortable with things like flexible work arrangements, getting rid of annual employee reviews, and challenging other outdated ways of working”.

As Morgan points out, authority needs to be delegated to allow employees to be active and engage in activities that fulfil their needs as well as that of the organisation as a whole.

Morgan highlights organisations adopting a flatter structure include Whirlpool, Cisco and Pandora.

In short

We need to encourage active participation of employees throughout the organisation. The structure needs to be as innovative as the products and services the organisation produces. If employees believe they can add value, they need to be able to actively apply that value wherever it is needed in the organisation and not be constrained by organisational hierarchy.

Coming up!

Upcoming posts in this series entitled ‘Kill the Hierarchy’ will continue to explore how we flatten the hierarchy in order to achieve rapid and decentralised decision-making, employee engagement, high levels of collaboration, widespread autonomy, trust and respect, and an environment in which everyone leads.

More posts on their way over the coming weeks and months, exploring how we need to take a fresh and radical look at organisational change management, and the changes we need to make if we are to thrive.

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