How hierarchies have a hellish impact on decision making
Complex organisational structures breed inefficiency and disempowerment, but the real culprit is unclear accountability and hierarchical behaviours, not just the number of management layers.
Many of us have worked in large organisations that operate through multiple layers of management, with siloed business, functional and/or regional units. We’ve all had that experience of deflation at having to navigate the complicated matrix of where power, authority or just decision making lies.
The study carried out by my colleagues at Karian and Box in 2017/18 across three multinationals in three different sectors highlighted the role that complex organisational structures play in both disempowering employees and making their working lives less efficient.
The complex hierarchy, matrix structure and silos ‘story’ is predominantly about the lack of effective and clear accountability for decision-making. This takes a range of forms.
Business units, functions, geographies and management layers cross each other – with diffuse responsibility and accountability for decisions. Indeed, sometimes, this complexity of governance leads to internal competition that enforces power-plays, duplication of resources and wasted effort. This complexity adds cost and confusion, draining the focus and energy of senior executives and managers.
Mandatory governance and control structures put in place to manage the various business operations, products and services. These can end up being complex mazes to navigate and create inevitable bureaucracy, slowing decisions and creating futility (where individuals do not even bother to try to get things decided or done).
As a result, many businesses are characterised by silos and a lack of teamwork, which sustains and even encourages complexity, rather than eradicate it.
Interestingly, the Economist Intelligence Unit study (2015) showed that organisations which report the highest levels of complexity are ones based on hierarchies in business units that report to regional HQs that, in turn, report to global HQs, and with a separate set of functions managed regionally.
However, caution is needed in how this is interpreted.
The analysis conducted by the team at Karian and Box found that more organisational layers do not necessarily create more complexity, and fewer layers more simplicity.
It’s the decision-making processes which have the greater correlation:
Hierarchical behaviours enforce multiple points of approval for decisions and/or reinforce physical hierarchies (overlapping with disempowerment to create a culture of upward referral).
Diffuse accountability for specific decisions or outcomes where matrix structures and working are more evident.
Silo working and disconnected teams, where there is duplication of activity on the same area of focus or solving the same problems.
Clarity of accountability
The 2017/18 Karian and Box study also showed that employees who do not feel those around them are taking action to reduce bureaucracy are far more likely to describe their workplace culture as hierarchical or having a silo mentality.
Almost 1 in 4 employees who said they do not believe action is being taken to reduce bureaucracy describe their workplace as hierarchical and/or having a silo mentality. Only 1 in 20 who say they ARE seeing action to make their work simpler describe their workplace in this way.
Critically, clarity of accountability and of decision-making responsibility were identified as key elements of employees’ perceptions of siloed working and complexity.
Those who said they were clear on the decision-making accountability around them were almost three times more likely to believe there is nothing stopping them from doing their job well. They were substantially more likely to believe those around them are breaking down barriers between teams.
So, it is not just having complex structures that matters.
It is the behaviours that they create and, indeed, create them. Complexity is a state of mind. Businesses can, if they so desire, change the structures. But can they also change the way people think and work? If not, then all you will get is a simpler structure, but potentially equally complex, hierarchical, silo-focused behaviours. And, guess what? In due course, the complexity creeps back into the once simplified structures.