Think out of the Pyramid
Higher levels of education and access to information mean that structures often negatively affect people’s behaviour and motivation, and consequently organisational performance, writes Robert Hooijberg

To remain successful, modern organisations need to tap into the knowledge and skills of their people, of course. However, the traditional pyramidal management structure can hinder rather than facilitate that goal. New approaches are needed that foster alignment, insight, cooperation and initiative among an organisation’s entire workforce.

In a chapter from the recently published book “Being There Even When You Are Not: Leading Through Strategy, Structure and Systems,” Robert Hooijberg and Paul V. Broeckx talk about getting the most from your workforce.

Limitations of a pyramidal structure
Pyramidal structures were originally designed to manage poorly educated, ill-informed people who needed supervisors to tell them what to do and how to do it. But these days, high levels of education and access to information mean that such structures often negatively affect people’s behaviour and motivation – and consequently organisational performance. Here are the worst limitations of the traditional pyramidal structure:

Vertical career progression. The hierarchical ladder frequently becomes a system in itself. People may choose a particular career path simply to enter top-level management, even if it does not match their profile or skill set.

Command communication. A top-down command mode, where orders are swiftly executed without being questioned, has long been accepted as the most efficient way to produce results. But by not discussing the expected results, alignment is achieved between the superior’s expectations and the action instead of between the action and the expected results. This communication style also assumes that people at lower ranks cannot contribute to strategies and objectives.

Company experience. While experience is obviously valuable, length of experience and seniority have often been confused. The cost of promoting people into leadership roles mainly because they have been with the company for years has become unaffordable today. In addition, these days experience (like knowledge) can rapidly become obsolete and a killer of creativity and initiative.

Internal competition. The traditional managerial principle puts employees in a competing mode, which can restrict and even discourage knowledge sharing and cooperation.

Silo thinking. The traditional managerial role of centralising information and being the sole point of communication between the team and top management is still embedded in the mentality of many managers today. This, together with reporting lines to one superior and the tendency of internal competition to create strong “allegiance” to the superior, automatically creates silos.

Obedience orientation. With the quality of task execution defined by the superior, it is more important to be obedient and conform to the superior’s expectations than to display initiative and concentrate on results.

Delegation of tasks rather than authority and responsibility. Traditionally, the manager retains decision-making authority and is often the “correcting” manager as well as the only judge of performance quality. But in trying to maintain their superiority, most managers tend to stifle others’ self-confidence, leading to lower motivation and efficiency.

Building on human potential
These limitations block four key factors that modern organisations need from their people in order to take full advantage of their knowledge and skills-and thus ensure long-term profitability and sustainable company development. These are:

• Alignment: A clear sense of the expected results and company values, with everyone convinced and engaged

• Insight: The process of transforming experience into action

• Cooperation: The genuine sharing of insights and knowledge

• Initiative: Improved efficiency through motivated, self-confident employees

When these four factors come together, silos and the silo mentality disappear. This alone is worth the effort and will unlock additional efficiency and effectiveness. There is also improved alignment with results-exactly what companies wish to achieve.

New management structures
How can companies break out of the pyramid structure and achieve alignment, insight, cooperation and initiative? We believe the answer is through flatter, more flexible structures where managers are more like “hubs” that connect people and combine skills, managing through a network rather than a traditional hierarchy. High-quality processes are needed for decision-making and debate, as are new ways of assessing people to give priority to insight over experience.

Nestle’s recent evolution from a pyramidal structure to a network organisation provides proof of the value of implementing such an approach. The company achieved this through its “Nestle on the Move” programme, which has five major parts:

1. Implementing flat and flexible structures: An in-depth examination of corporate structure and functions was undertaken, and the number of hierarchical levels was reduced.

2. Inspiring management: Programmes were implemented to improve the leadership skills of managers, starting at the top level, as well as to reverse their role from “passive judge” to “committed developer,” and so make them responsible for the development of their people.

3. Long-term development: With fewer hierarchical levels, fewer promotion levels are now available. Interregional and interfunctional moves were therefore enhanced to stimulate both personal development and organisational learning, and new roles were created that cut across traditional career paths.

4. Dynamic compensation: Horizontal remuneration models were developed that allowed increased remuneration even without promotion.

5. Lifelong learning: Nestle has always held a strong belief in the need for continuous learning, both through internal and external programmes.

“Nestle on the Move” has made an important contribution to company results in terms of drive and excitement. Leadership skills have demonstrably improved, and the new compensation model has improved the company’s competitiveness at all levels. Nestle provides a clear example of how a company should manage an emancipated workforce, and demonstrates, in a concrete manner, that people are the most important asset.

(Professor Robert Hooijberg is a professor at the International Institute for Management Development. Paul Broeckx is director of Nestle’s Corporate Human Resources Division.)

From The International Institute for Management Development c. 2007 International Institute for Management Development (Distributed by The New York Times Syndicate.)
.

Top^