Boxed in

What are the seven deadly sins of organisational charts? Jo Owen explains

Boxes are for the dead. But when it comes to organisation charts, managers
love putting people in boxes. They stack the boxes up and rearrange them in
neat, orderly rows. It is not a pretty picture. They then expect staff to lie
in their boxes. Some staff enjoy this: it is their own space which no-one else
can occupy. But for many managers this is another excuse for more power
politics in which they trade hapless pawns with other managers.

Used well, organisation charts are for the living, not the dead. They
simplify and clarify critical issues about who controls what. Even in today’s
world of flat organisations, the issue of control is essential – management has
never been a democracy and never will be.

Clear lines of communication, control, accountability and decision making
remain important in every business.

There are many ways to design the right organisation but too many
organisation charts complicate things.

Following the architects’ dictum that ‘form follows function’, so the
organisation (form) of a business should follow its function (strategy). There
are, however, a few ways in which businesses get their organisation wrong.
These are seven deadly sins of organisation design – if you see one, take care.

1 The upside down pyramid: Very trendy, it is normally used by
the most senior manager to show that the leadership team are really at the
bottom of the organisation pyramid, and it is their job to support the most
important people, the front line staff at the top of the pyramid. This at least
impresses the person giving the speech. But for the front line staff hearing
the speech, they do not see an upside down organisation chart with them at the
top. They see a spinning top, possibly spinning out of control, in which
everything depends on the great leader at the bottom of the chart. If the
leader moves, the rest of the spinning top has to lurch in the same direction.

A mild variation of this speech is the pyramid on its side, with the front
line staff facing off against the customers. This is a slightly more honest
picture: it shows the front line staff, like soldiers, at the front facing the

The generals naturally, are safely in the back issuing orders to the front
line. If you have a pyramidal hierarchy and you lead it, then say you lead it
and show you lead it. The upside down pyramid is at best as trendy as purple
flared disco trousers, and at worst patronising to front line staff.

2 Silos: By now, most managers are familiar with the danger of
organisational silos. These are most common in traditional functional
organisations, which work well in relatively stable environments.

The problems occur when things change fast, or when unexpected difficulties
emerge. When there is success, everyone is responsible. When things get tough,
suddenly it is everyone else’s fault.

When sales dropped at an electrical goods manufacturer, the sales department
blamed marketing for a poor promotion. Marketing blamed product development for
developing the wrong products. They in turn blamed R&D, who blamed finance
for cutting their budgets. Finance blamed sales for underselling. So the circle
was complete: every silo either was or was not responsible, depending on who
you listened to. And because each function inhabited deep silos with strong
walls, there was no discussion or co-operation between the silos. All the
discussion went up to the top of the silo, across and back down again. So
communication, decision-making and conflict resolution were at best slow, and
more often non-existent.

3 Pancakes are closely related to, and tend to reinforce,
silos. A pancake-reinforced silo is a deadly organisational concept. Each
pancake is a layer of the organisation. The more layers, or pancakes, there are
in the organisation chart the fatter and slower the organisation is likely to
be. Each pancake acts as a filter, or obstruction, to both communication and
decision making.

A silo organisation with many layers, or pancakes, is one designed for a
steady state. It will be slow, risk averse and cumbersome – and in many
countries is known as the civil service.

There is an alternative version of the pancake organisation: one which is
very flat and does not have a big bureaucratic hierarchy. The Catholic church
is flat: Pope, cardinals, bishops, priests and laity give a total of five
layers for an organisation with up to a billion members. Most business with
just a thousand staff struggle to get by with less than five levels from
chairman downwards. The Catholic church has survived longer than most business
organisations are likely to.

4 When you cross a pancake with silo, you get a cave. The
manager is walled in on either side by the other functional silos. Above is the
ceiling of more senior management, and below is the floor, beneath which more
junior management exist. The manager watches the shadows of the outside world
flicker past the entrance to the cave. In the cave there are limited
responsibilities, limited communication and a limited view of outside reality.

Organisation design should blast caves and caveman thinking. This should
enable clear responsibility, good communication and decision-making and should
allow outside reality to be felt throughout the organisation.

5 The matrix organisation: Meant to be the antidote to the
traditional command and control hierarchy, with lots of silos and pancakes.
Some matrix organisations simply succeed in adding complexity to the simplicity
of the command and control organisation. Like the dieter who asked his doctor
whether he should eat his diet before or after every meal, not everyone
understands it: the matrix should be lean, simple and instead of the
traditional organisation, not in addition to it.

One traditional life insurer managed to go to a seven dimensional matrix.
There were units facing off against products, geography, customers (by type),
customers (by letter of alphabet), functions, channels and industries.

Stephen Hawking may be able to think and operate in seven dimensions, most
of us struggle with more than two organisational dimensions. And even then, in
practice, our loyalty and commitment is always skewed to one side of the
matrix. We prefer certainty over the ambiguity of the matrix organisation. But
if there is a matrix, make choices and keep it simple rather than fudge the
decision and have a bit of everything.

6 The virtual organisation is the antidote to formal organisation
structures. This is where the organisation chart is thrown away and the
organisation insists everyone works in flexible, non-hierarchical
self-organising teams. In theory, this is a high commitment, high involvement
and highly flexible workplace. And it can work, where the business is very
small and trust very high. Four or five people working together in a start up
do not need organisation charts. But in larger organisations, clarity is needed
about who does what with what resource and to what end.

The virtual organisation can exacerbate the worst features of the matrix
organisation: it clouds responsibilities and allows people to hide.

7 The organisational bible: Deadly. Whenever a manager can
immediately produce reams of organisation charts from a desk drawer, or
gigabytes of the same on a computer screen, be suspicious. One privatised
utility had mountains of organisation charts, which went alongside bookshelves
of procedural manuals. It was bureaucrat heaven, customer hell. Each part of
the chart represented an empire which was jealously guarded by each little
emperor and empress. The result was an overdose of in-the-box thinking: the
priority was to protect and promote the box which represented each empire.

What the leadership had missed was that there are other ways in which to
control the organisation besides structures: culture, reward and measurement
systems and common skills can all balance and complement the formal controls of
the hierarchy embedded in the organisation chart.

There is no universal solution to the problem of organisation charts,
because there is no one type of chart that fits every organisation. Often the
best thing to do is to draw the chart up and then throw it away. The process of
drawing up the organisation chart forces management to focus on three key
organisational decisions: who is meant to achieve what (responsibilities); how
the resources of the organisation will be focused and controlled; and who needs
to co-operate with whom.

Implementing the new organisation chart is also a wonderful opportunity to
renew the psychological contract with everyone. The new organisation should
give rise to a series of structured conversations about what both the manager
and the managed expect to achieve in their new roles, and how they can best
work together to achieve those goals.

Done well, the process of reorganising can re-energise and refocus the
organisation. Done badly, it will demoralise the organisation with uncertainty
and politics. Speed, simplicity, clear choices and good communication tend to
be at the heart of most effective reorganisations. In a complex, changing
world, that is often easier said than done.

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