Two fundamental shifts are taking place today in the world of work. The first is that work is no longer a place. The second is that the human experience just got a lot more digital with absolutely every aspect of our life.
Both shifts are underway and while we expect more people to return to some office-type working arrangement, it will not be like it was. Quite literally millions of workers who can now work from anywhere will choose to do so. This will fundamentally change the ways we get work done, including how we structure teams, and team meetings, deliver high fives in the hallways, and how we collaborate and develop relationships at both work and home.
One other fundamental aspect to consider is whether your current organization is structured in a way that enables it to provide the necessary employee experience mixed with the speed and innovation it needs to compete in the post-pandemic scramble for market share.
Before COVID struck, we all began noticing a shift of the traditional hierarchies that have long served as the model for corporate life. The reason this was happening centered around trying to put decision makers closer to the customer instead of all major decisions coming from corporate headquarters. That need was driven by the often slow and expensive nature of hierarchical organizations facing faster and more agile disruptors who could easily outmaneuver them.
How We Became So Top Heavy
How an organization is structured plays a vital role in how it ultimately performs. Alfred D. Chandler, Jr., a highly regarded Harvard Business School professor, wrote about management structures of modern corporations for most of his life. In 1977, he explained how major corporations like General Motors, Sears, Dupont and Standard Oil were able to change their structures to meet the ever-changing demands of technology and consumer behavior, while working to remain relevant by supplying high-value solutions to customers. Does any of that sound familiar to the challenges we face today?
Chandler added significant insight to how organizational structure worked and coined the phrase “structure follows strategy.” The mantra has been used for decades to help shape both structure and strategy. His point was that how you organize the work of your company must be inherently linked to your overall strategy. Does this mean that you need to modify your structure every time your strategy changes?
All of this also invites another question: How did we end up with many organizations being structured as hierarchical top-down companies in the first place? We can thank railroads for that contribution. What happened in many cases is that when the moment came to set up an organizational structure, founders or leaders defaulted to a structure that was based on railroads in the 1800s. So yes, many of our current organizational structures were decided by people well over a 170 years ago.
Railroads were the first and most successful “big corporations” in the United States. They were viewed as the embodiment of success. They offered people the promise of a better future with good pay, growth and many new opportunities. They generated an entire industry that was highly influential and successful. While railroads made a lot of money, brought important items to new markets, employed thousands of people, and forged a western new frontier, they also hold the distinction of having one of the biggest impacts on how organizations are structured and managed.
A Scottish-born American leader named Daniel McCallum worked at the New York and Erie Railroad in the mid-1850s and was trying to figure out how to structure the organization given the incredible growth and demand they were facing as well as its behemoth size which literally covered thousands of miles. The solution was a very organized hierarchy that went on to become the adopted ways new organizations were structured.
But that was the 1800s. Does this type of structure still warrant so much influence on how we work?
Back then, the U.S. was learning how business outside of farming worked. It also was learning how to be a country, and this meant a lot of expansion opportunities in an emerging era of explosive growth that would ultimately shape and influence businesses around the world. The railroad industry was as well-timed as any in history. Supply and demand were perfectly balanced with fast growth and an emerging competitive landscape where the winners were those who got there first.
A command-and-control organizational structure that tried to account for every scenario and a host of job positions to oversee everything — even other positions — enabled organizations to meet demand with so many new people, processes and strategies all emerging in proximity. Thus, with these expansion needs and unlimited opportunity, railroad leaders put controls in place to account for how they would grow. Today, you know this as a top-down hierarchy with middle managers.
Yet, in their attempt to account for every business transaction, railroads could not easily communicate, since offices and employees could be hundreds of miles away and only connected by a train track. Some communication options existed in the 1800s — but conveniences like emails, FaceTime, and texting would not show up for another 200 years. The limited communication meant that the ability to build trust was restricted. Thus, they designated power, decision making and authority in a tiered system of management.
Don’t Be a Railroad
Today, we live and operate in a world of hyper connectivity. But even for those reluctant to adopt remote strategies, last year proved that connection and communication are not impediments. A recent study conducted by WorldatWork and SalesGlobe found that across industries, 60% of employees are currently working remote on average, and 77% of organizations will make remote work policies more flexible after the pandemic. We now have “anytime/anywhere” communication capability and 2020 proved that remote structures work. Now it’s time to look and consider if current organizational structures support our needs or have become obsolete.
Having a command-and-control organization is not only expensive, but also time-consuming and likely not able to keep up with the post-pandemic workplace. Success in the workplace and resilience beyond COVID-19 will be achieved by those organizations that not only reduce or avoid silos and hierarchical models, but those that are able to speed up the workflow in the most direct and simple manner possible. When Prof. Chandler released his work on structure and strategy, he contended that the structures of organizations must shift when the current structures are pushed too far and are causing inefficiencies in the overall ability to deliver your desired outcomes.
Organizational structures need to align to work realities post-pandemic. On top of embracing digital tech’s omnipresence, we are migrating to a more open model of working with heightened levels of flexibility. This affects not only when people want to work, but where and how often. Is it time to remove some of the command-and-control approach to work and instead push for higher levels of purpose and impact?
As you contemplate how you organize your teams to continue delivering on your customer promises, you may benefit from turning your organization into a flatter and more fluid organization. While some roles need to be maintained, I am suggesting that your organization’s communication, workflow, idea generation, feedback systems, and in many cases, decision making be flattened. This will allow people to interact in fluid networks that cooperate in different ways, depending on the project and goal. This also allows the full talent and skill of individuals to be put to the best use. Why should someone be limited just because they work in a specific function?
Adopting these new fluid ways not only gets jobs done but allows the building of more synergistic relationships among talented employees, while accelerating the careers and development of those who can make a difference in your business. We know skill development is too slow for most organizations and could benefit by a reduction of internal constraints and red tape.
While I am not suggesting that your organization stop having bosses, I am suggesting that what remains hierarchical should only be the workflow of the processes that need to be scaled for growth. It is more efficient to have smart deadlines, good outputs and high-quality levels.
Structure an Organization That Is Fluid
The speed and remote environment in which the world is moving today requires rapid and efficient decisions and reactions from the right stakeholders. Organizations cannot rely solely on centralized directives because that structure is not fast enough nor is it close enough to the customer experience. Accountability will be based on the project itself — the collective outcomes that you are trying to achieve. You may want to be aggressive on things such as timelines. But you do not want to take that approach with dictating how the work gets done. You will always want to be more hands-on when people are learning new tasks, so keep in mind the concept of fluidity is more effective once people are no longer dangerous in their new tasks.
"As you contemplate how you organize your teams to continue delivering on your customer promises, you may benefit from turning your organization into a flatter and more fluid organization. While some roles need to be maintained, I am suggesting that your organization’s communication, workflow, idea generation, feedback systems, and in many cases, decision-making be flattened."– Scott Cawood, CEO of WorldatWork
While some leaders and business schools support a literal interpretation of Prof. Chandler’s assertion that structure follows strategy, the point he was so powerfully trying to make is that the ability to adapt was, is, and will always be a fundamental capability that organizations and leaders need. I think we can all agree that structure and strategy are intertwined with one another, and each play a significant role in organizational success.
In the end, like most things, organizational success comes down to strategy, culture, leadership, and people who structure themselves in meaningful ways that ultimately make an outcome happen. The current challenge facing most organizations and leaders is the complexity and time it takes to structure an organization that is not all that structured.
For now, we must all contend with the challenges that come from a year like 2020 where we have a new view on work, workplaces and workflow. Whether you are a small, medium, or large organization, every organization has been affected differently by the advancing technologies, new communication systems, and much of the impact over the last decade that pushed organizations to decentralize. This now means we will see new structural solutions appear, such as partnerships instead of acquisitions and yes, even 100% virtual companies.
While we have some challenges today that railroad titans were trying to solve 170 years ago (growth, expansion, quality, consistency), many issues are no longer so prevalent or matter in the ways they did. Thus, the challenge today isn't if your structure follows your strategy, it’s whether your structure gives you enough fluid options to keep offering perceived value to your customers, making money on such offerings, and being able to organize your workplaces so that the people in them desire to carry out the strategy.
About the Author
Scott Cawood, Ed.D, CCP, CBP, GRP, CSCP, WLCP is the CEO of WorldatWork.