)
Despite decades of delayering, most organizations continue to have more hierarchical layers than they need. These layers take many forms: project managers (like the ones at MobiliTele), dotted-line positions in matrix organizations, regional headquarters, and functional coordinators. Many of these layers are the inevitable result of the hard response to business complexity. But often another factor is also at play: because the company is not very good at inspiring people to perform, it creates new layers in order to offer promotions into managerial positions as a 'carrot'. These positions are just poor substitutes for genuine motivation; they don't add much value, and the roles have little or no power.
In companies that have hierarchies heavy with these coordinating functions and pseudo-managerial roles, there is such an excess of managers that they tend to lead very small teams, sometimes composed of only a few people. If a manager has only two direct reports, he or she depends 50 per cent on each of them for the work that needs to be done. The reports, however, hardly depend on the manager at all. That's because, with so many layers and units, there are many ways to bypass the manager. The result is an inverted hierarchy: the manager depends more on the team than the team depends on the manager; managers have insufficient power to add value. It is better to have no hierarchy at all than an inverted hierarchy.
Therefore, the first step in reinforcing your managers to play the integrator role is to cut the number of hierarchical layers, which simultaneously increases the span of control and shortens hierarchical lines. When managers are too far from where the action takes place they need metrics, KPIs, and scorecards. All these are poor summaries and imprecise proxies for what people really do. These proxies fail to capture reality while also adding to complicatedness. Whereas most organizations think of delayering mainly in terms of cost savings, far more important is the way it can free up managers to really manage. When you remove a management layer that does not have sufficient power to actively shape people's work contexts, you not only eliminate an organizational element that is useless and adds to complicatedness (thus altering information and slowing down decisions). You also make it easier to reinforce as integrators the management layers that remain.
Keep and reinforce only those management positions for which you can give clear answers to these questions:
* What value is this managerial position supposed to add? What is this manager supposed to make teams do that the teams would not do spontaneously on their own? To be clear, we are not talking about writing a new job description. Answering such questions requires getting to the specifics about why you need this management layer and what would not happen without it. All too often, senior executives do not really know what value they expect their managers to add.
* Even when you are convinced that there is some value that managers can add to a particular task or work group, are you sure there is no other manager, located either below or above the work unit in the organization, who may be better placed to play the integrator role?
Minimise Rules
To be effective integrators, managers need room to maneuver so that they can make a difference for their teams. This freedom is often eaten away by procedural rules. Just as many organizations have too many layers of management, they also have far too many rules. As performance requirements multiply, they respond by multiplying procedures to address each requirement. When a new urgent need arises - to improve safety, reduce cost, or better manage risk, for example - the response is legislative, creating new formal rules. It's the same phenomenon that we see in government, where legislators respond to every call for action with a new law.
Rules in the workplace can take many different forms:
* A process definition specifies that the way to achieve X is by doing F followed by Z.
* A performance target becomes a priority in every situation,even when the target doesn't really make sense.
* A template specifies the only way to convey a certain type of information.
* Monitoring scorecards specify how activity is recorded.
* A computerised job request is a rule on interaction.
* An internal contract, such as a service-level agreement between support services and internal customers,details what mechanisms constitute minimum (and very often, therefore, maximum) service.
The over reliance on rules reflects a misunderstanding of how rules really function. It is not what the rule decrees that matters. It is the effect the rule has on the actions and interactions of the people involved - how the rule affects the context of goals, resources, and constraints to which people adjust their behaviors.
SIX SIMPLE RULES: HOW TO MANAGE COMPLEXITY WITHOUT GETTING COMPLICATED
AUTHORS: Yves Morieux, Peter Tollman
PUBLISHER: Harvard Business Review Press
PRICE: Rs 1,250
ISBN: 9781422190555
Complexity isn't necessarily bad, it presents an opportunity for competitive advantage: Yves Morieux & Peter A Tollman
Complicatedness is a consequence of how organisations respond to complexity such as adding more procedures, layers etc, which can hamper performance and demotivate people at work, Morieux and Tollman tell Ankita Rai
What is the difference between complexity and complicatedness? Why complicatedness is the bigger trap than complexity?
The environment in which modern organisations operate are increasingly complex as a result of more stakeholders, globalisation, complex supply chains etc. In fact, the BCG complexity index reveals that complexity has increased six-fold in the last half of the century. As a result, business imperatives committed to in this period have increased, on average, from 4-7 to 25-30. Complicatedness, on the other hand, is a consequence of how organisations respond to complexity such as adding complex procedures, layers, structures, scorecards etc. Complexity isn't necessarily bad. It presents an opportunity for value delivery and competitive advantage. However, complicatedness hampers performance and demotivates people.
The bigger a company gets, the more complicated it becomes in terms of hierarchical layers and rules. How can companies avoid this?
We have assessed complicatedness as a function of a company's size and have also measured complicatedness as a function of a company's scope of activities. We find no relationship between complicatedness and either of these two factors. Instead, complicatedness is largely a function of how companies respond to complexity - size is not a necessary driver of it.
What are the key metrics to keep in mind for rewarding individual performance in teams?
Organisations that rely exclusively on quantitative metrics of individual performance encourage individual contributions and, therefore, discourage cooperation. To illustrate, consider the relay race described in the book. It's possible to measure the individual contributions of each runner. It's possible to measure overall elapsed time. But it's not possible to measure the impact of cooperation - the baton pass, in which one runner has the ability to improve the performance of another by passing the baton effectively. The rub is that by focusing on an optimal baton pass, the handing-off runner will sacrifice her individual performance. If all that's measured are individual times, then runners will be encouraged to optimise those at the expense of cooperation. Thus, since cooperation can't directly be measured, it needs to be observed qualitatively and rewarded.
That's a key role of management.
Yves Morieux
Senior partner & managing director, Washington, DC, office of the BCG
Peter A Tollman
Senior partner & managing director, Boston office of the BCG
Senior partner & managing director, Washington, DC, office of the BCG
Peter A Tollman
Senior partner & managing director, Boston office of the BCG
Reprinted with permission. Copyright 2014 The Boston Consulting Group. All rights reserved
