We were presenting out the results of an organization restructuring during a steering committee meeting at one of my clients. The Chief Commercial Officer said of the new design “I love it. I am a big fan of dotted lines.” I smiled and nodded, but inside I cringed. Trying to overcome silo issues through the use of matrix structures may have some benefits in terms of collaboration, but at too great a cost in terms of efficiency and effectiveness. Matrix structures are complex and difficult to manage. Matrix structures destroy the elegance of hierarchy. (For more thoughts on this topic, click here.)
When I hear things from clients like, “We are shifting our operating model to agile ways of working,” I tend to nod in agreement, as this sure sounds like the right thing to do! But what does this really mean? In my experience, clients are looking for ways to change their patterns of behavior to increase speed to decision, reduce waste in the system, and improve the satisfaction of their customers and employees. They start by changing their reporting lines, but they find that nothing really changes with respect to these critical outcomes. They have invested a lot of money in expensive consultants yet have the same business performance and the same employee experience.
Why? Because while hierarchal reporting is one type of network, while the horizontal networks of relationships that exist are much more resilient. In many cases, as described in my previous blog on ONA, the informal relationships between individuals and teams that trust one another are highly beneficial to organizations.
However, that is not always the case – not even close. In addition, these workarounds, these legacy practices that have evolved over time in response to the inconsistencies in the organizations design can be considered organizational scar tissue. Consequently, if you fail to address the root cause of the wounds, you fail to get the business results you need.
A previous client so eloquently said to me one day, “How do I give my organization a lobotomy?” Perhaps that is too harsh, but certainly we need to change our ways of working when we change our hierarchy. We also need to do this intentionally, by deliberately structuring the horizontal networks as we do the reporting relationships. There are several alternative solutions to matrix reporting that accomplish this.
The Peopletecture Model Solution
Using the elements of the Peopletecture Model allows any organization to address their “Ways of Working” in a meaningful way that reliably achieves the business results that are expected as the result of a reorganization:
Networks of Teams
Through organization network analysis, the challenges to the horizontal patterns that need to be altered are identified. To change these patterns, restructuring is only one answer. Other meaningful interventions include:
- Job Rotation – Employees get to experience life in different parts of the organization.
- Temporary or Permanent Work Groups – Employees carry out isolated tasks which are separate from their day jobs in new groups.
- Informal Meetings – Managers are incented to organize informal connection events where information can be shared and relationships built.
- Establishing Centers of Excellence – This process involves implementing high standards around a particular process or product can be developed and diffused into the organization without the existence of a formal division/reporting relationship.
- Roles and Responsibilities – In the reorganization of the hierarchy, you can delegate authority and hold people accountable. But most of the decisions that are made in organizations are done through networks of trust relationships. Allowing the teams that are impacted by the reorganization to establish shared responsibility and commitment to others (proactively sharing information and helping when asked) through role clarity, role crafting, and teaming agreements will change the patterns for the better.
- Metrics and Rewards – Choosing organizational performance measures and assigning accountability for these, such that communication is required with others who are spread across the organization and who have influence over the measures. For example, budget flows between different people can foster informal reporting: Allocation of indirect costs is one example– employees own indirect costs and need to communicate with people across the organisation about these costs. Transfer pricing policies is another tactic – policies are designed so that managers across the organisation need to communicate with each other. A third impactful intervention is updating objectives and incentives focus on driving targeted network development.
So the next time you hear something like, “We are ensuring an enterprise mindset in everything we do,” you might pause and ask HOW that’s being done. You might also offer up some suggestions highlighted here to move from lofty statements to real and meaningful change.
I would love to hear from you, so please email me at drmcdowell@orgstrategist.com!
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