Saturday, December 29, 2012

The Agile Enterprise - On hierarchies and management

“Accept the fact that we have to treat almost anybody as a volunteer...”
Peter Drucker

The first article of this series covered the topic of self-organization of teams inside an organization, which raises the question of whether such arrangement should lead to the formation of hierarchies amongst people and teams.

As with any free-market, every need has somewhat of a measurable value for a consumer, and the aggregate demand may be sufficient to create a market for that need. That context helps reshape the initial question as:
"Does a self-organized team have the need for a boss?"
Gary Hamel proposes a mind-bending leap in "First, Let's Fire All Managers", which ends in a far less absolute question on how to balance the free-markets advocated in the first part of this series with the kind of coordination afforded by centralized decision making in the hands of a single manager. Before solving that apparent conundrum, I also add the wisdom of Peter Drucker, who once wrote:
"The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product."
The conceptual subtlety here is that management must not entail hierarchy.

Hierarchies are not evil...

Whereas there is an unquestionable market demand for someone who can coordinate activities across market contributors, it does not immediately follow that a hierarchical arrangement should be formed between that coordinator as a manager and the people producing the work as employees, let alone an arrangement where that ability for coordination is morphed into the responsibility to evaluate and compensate the other members of the team.

However, this reasonable subtlety does not negate the possibility that some individuals do possess all required attributes to coordinate work within a team and also to effectively manage the people in that team from a human resource perspective. Some of the people with those attributes, and I intentionally do not call them managers in the traditional sense, will go even further and demonstrate the ability to inspire and strategically guide the team.

If at some point in the creation of a product or service, a team surfaces the need for those attributes, they will naturally seek one or more individuals that can play those roles, but it is somewhat unlikely that they would transfer absolute power over their work and evaluations to the hands of a single person.

...nor permanent

On the other hand, to force the opposite end of the argument, and keeping in mind the information market proposed in part 2 of this series, imagine that someone with a Steve Jobs-like talent and track record advertised the formation of a team to create a new product within the organization, it is conceivable that a number of people would be willing to relinquish some level of autonomy in order to be a part of that team.

In the worst case, also keeping in mind the frequent rotations proposed in part 3 of this series, people who eventually regret the arrangement can somewhat easily find a new home in a different team. Without the proper support and eventual success, hierarchies can disappear as quickly as they were formed, once the last employee leaves the manager.

Extending the exploration to large organizations, which I somewhat arbitrarily define as companies with 1000+ employees, where it is not unusual to find 5 or 6 layers of management, the principles that govern the need for the next layer of hierarchy remain unchanged. If the team does not voluntarily submit to the guidance and personnel oversight of a new manager, there is no support for that level in the hierarchy.

In a traditional organization, that model can still work and has worked for several decades, if not in a less efficient arrangement and with potentially unnecessary layers. As a rule, these layers are nearly impossible to break down and even in the rare episodes of reduction in management lines, these are often watershed moments in the history of a company.

Leaders first, managers later...or never

Self-organization does not preclude the notion of hierarchies and traditional management, but offers a natural mechanism through which people can form these hierarchies in a way that is dynamic and in alignment with personal interests and business goals.

There is still considerable room for research and experimentation on the organization models required to govern the interactions between large numbers of self-organized teams in a concerted way.

Primordial laws of supply and demand between multiple teams are unlikely to work well for sectors of the industry with longer product cycles (automotive and pharmaceutical come to mind) , so that a unifying force and long-term vision remain essential.

What is not essential is the collusion of those two elements with the formation of hierarchies. In fact, virtually all managers out there would rather lead than manage, largely held back by unimaginative HR policies that continuously deposit the responsibility for evaluations and compensation onto their shoulders, a topic for an upcoming posting.

No comments:

Featured Post

Crowds in the clouds, a brave old world