Command and control is over… enter the self-organizing worker
When Alfred Sloan led General Motors to become the largest company in the world during the early twentieth century, he inspired the modern corporation to be based on hierarchical management structures and clear leadership that remains in many organizations today. But the technological revolution is accelerating and digital transformation is forcing organizations to adopt new working practices to keep pace.
New entrants to the workplace want flexibility. Having grown up with technology at their fingertips and digital skills from an early age, the only hierarchy they know is who can pull in the most likes on social media. As a result, workers of the future will be self-organizing, working with peers across different platforms to deliver projects. When something goes wrong, they’ll swarm together to solve the problem and fix it. And they’re most likely to do this over chat based networks or video.
We’ll also see a rapid shift from strict hierarchy to flatter structures. New alternatives to traditional management structures, such as ‘holacracy’, will be created. Each job role will need to have meaning, everyone will be a major stakeholder and, motivated by a shared purpose, employees, customers and partners will succeed and fail together. But what does the self-organizing worker mean for leaders? How will leaders cope with less control and employees without clear authority? And who will be accountable if mistakes are made that are reputationally damaging? If there is a scandal, fraud or a lawsuit, when the buck still stops with the CEO, he or she may be uncomfortable to move to a fully decentralised management structure.
Companies that still have traditional hierarchies in place can only grow as fast as their leaders can manage. Bringing in superior directors or simplifying processes takes time, especially if there is only a handful of people running an organization. With technological advancements, leaders who have spent their careers working their way to the top of the management structure are starting to be outpaced by the constant developments. Technological skills are no longer the sole responsibility of the IT team as day-to-day jobs encompass more digital expertise. Young people, that have had technology at their fingertips through their entire lives will pick up developments more quickly, and subsequently progress faster.
Forward-thinking organizations are responding to this limitation, by implementing a flatter structure and distributing authority and decision-making to all employees. This may make processes less predictable and efficient in the short run. If implemented successfully however, it will increase the capacity of leadership to all employees, who will be empowered to respond quickly and take the initiative rather than waiting for a traditional ‘leader’ to give direction.
Self-organization in practice
Now let’s explore holacracy in a bit more depth. It is a system of flat organizational governance in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than the traditional top to bottom management hierarchy. Focussing on Zappos, a company that embraced holacracy, CEO, Tony Hsieh, said that many people misunderstand the concept, thinking it means eliminating all hierarchies within the business. Describing holacracy, he said: “Instead of being a hierarchy of people, it’s a hierarchy of purpose.”
Hsieh added: “It starts with something called the general company circle, the purpose of which is the same as the business’s purpose statement. Within that circle are sub-circles and roles. And then it cascades from there for each sub-circle.”
He highlighted a key difference from traditional companies, which is that an individual can fill multiple roles throughout an organization. This takes the pressure off traditional leaders. Whereas before, a manager may dread going on holiday and fearing what could happen in his or her absence, now managers can leave knowing that their colleagues have been empowered to pick up the slack and improve processes while they’re away.
Who is held responsible for problems?
As with many new approaches to running a business, the concept has faced some scepticism: a common barrier to adoption of the model that opposes strict management structures is a lack of accountability. Without clear leaders, who will be liable if a problem occurs? The idea of empowering all employees, who better understand the responsibilities rather than just their title, means that accountability must be made crystal clear. By ensuring that each individual’s purpose is given the same importance, it should be easier to determine who is responsible for what.
Talent management can also be affected in a holacracy structure. Some organizations that have already adopted self-organization have seen managers quit through fear of losing a title that they feel they have earned. Recruitment also becomes difficult as hiring skilled and quality employees, without being able to offer impressive titles, could be perceived as being a less attractive opportunity or even a backwards step by the candidate.
Holacracy is the first fully formed alternative to traditional, hierarchical management that many progressive companies are already using successfully. Manufacturer, ARCA and Impact Hub, a locally-rooted, globally-connected community for purpose-driven entrepreneurs, both switched to holacracy in 2014 and profess its success. Both firms faced similar early challenges, which included a steep learning curve when adapting to this radical change in management style. Managers reacted differently: some relinquished control, trusting the newly distributed authority to produce what they needed. Others failed to embrace the new notion and instead try to maintain the control they had had before.
Holacracy is not the only alternative and as organizations become more accustomed to these new ways of working, there will be many other operating models to explore especially as more teams become global and involve remote workers. Of course, fully adopting self-organization is quite a complex process, and it may not be effective in every company. In the short term, companies can trial a self-organized structure in certain areas of a business to canvass employees’ feedback. Companies that drive innovation and productivity will remain competitive in the Future of Work, and empowering all staff members to self-organize and have an equal voice may produce more innovative ideas than a traditional approach.
For more information on how technology is shaping the workplace of tomorrow, read our Future of Work report - https://atos.net/nl/nederland/future-of-work