A Stunning 92% of Companies Want to Reorganize This Year. Here’s Why You Need to Be One of Them.
92% of companies recognize it is time to do something about the dusty old Factory System hierarchy we’re still clinging to. Some amazingly successful companies have already left it behind.
In a 2016 paper predicting the focus of company leaders this year, Deloitte University Press shares this eye-opening conclusion,
After three years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization itself, with 92 percent of survey participants rating this as a critical priority. The “new organization,” as we call it, is built around highly empowered teams.
The Factory System Still Reigns
The corporate organizational positions we inherited from the Factory System of the Industrial Age exist whether there is a human being attached to them or not. They are power slots in a hierarchy that are to be reached for and accumulated under you.
This model reflects a direct military heritage, communicating exactly which role has more power, command and control than the role below it — CEO (4-Star General), President (1–3 Star General), Vice President (Colonel), Director (Major), Manager (Captain), and Supervisor (Lieutenant).
Giving Everyone Their Brain Back
The Participation Age organization model is quite different. It is based on the idea that people are smart and motivated and don’t need to be managed. Therefore we can flatten the hierarchy, distribute decision-making, and get rid of unnecessary layers of command and control, such as managers:
We know intuitively that this tired old Factory System model we dragged into the 21st century is broken. Our first attempts have been to tweak it, attempting to solve its inherent problems by nibbling around the edges and focusing on red herrings like ”empowerment” and “engagement”. But while we’re treating these symptoms, the cause, a medieval military model, remains intact.
The good news is that the early adopters of the Participation Age organization smashed the military model decades ago, and the long-term data is now indisputable. In the emerging work world, those who dissolve the traditional hierarchy and give everyone their brain back will thrive, and those that don’t, will be left behind.
Hundreds of very large companies with 5,000 to 65,000 Stakeholders and thousands of smaller ones have been operating without a military model for 60 or more years. And their numbers are growing quickly. These companies are identified by a rejection of command and control hierarchy, and by distributing decisions to the levels at which they will have to be carried out.
Leading Without Managing
Such organizations don’t have any people who manage other people. Instead, they organize around teams of people who, in the absence of a manager over them, take over all the traditional functions of management, and distribute them to members of the team.
These teams decide who they will hire and fire, how to discipline themselves, and their metrics for success. They agree with leadership on the result needed, then design their own processes to get that done, something a manager used to do. In many cases they even determine how to distribute pay amongst the team members.
Old Eyes, New Eyes
Anyone looking at this through the lens of a traditional business hierarchy sees chaos and anarchy. Yet every example of it in the real world results in faster growth, better margins, higher productivity, exponentially lower staff turnover, tighter processes, and better products. And yes, people with no business education, such as dock workers at The Morning Star Company, can manage themselves to higher levels of success than if they had a supervisor. There is no data on the side of the traditional military hierarchy in a business setting (even the military is questioning it these days).
So why do companies still do it?
First, because they don’t know what else to do. For over a hundred years, colleges have taught the Factory System model as if it was the only and best way to do business. It is neither. Rehumanizing the workplace and giving everyone their brains back works better.
Second, those who love command and control fear losing it, even though the result would be undeniably better for the companies they run (it’s not about the company, it’s about me).
Third, leaders fear a big dip in performance on the way to cleaning up the hierarchical mess. They are thinking, “It may not be optimal, but it’s working well enough as is, and we have pressure to perform this quarter.” The reality is that it doesn’t have to be disruptive at all. In most cases, if implemented correctly, a Participation Age model can result in immediate upticks in all the traditional metrics of success.
A Better, Simpler Way
The Deloitte research has revealed the obvious; we know that hanging on to the tired Factory System hierarchy isn’t working. It isn’t the only, or the best way to organize. There is decades of data that proves a flatter, more distributed model of power, decision-making and leadership works better, for both the organization and the people who work there.
There is a tidal wave of companies moving in this direction. Will you be one of them? The data is in — those who adopt the Participation Age model will thrive, and those that don’t will be left behind.
Article as seen on Inc.com