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How to free your company from organizational-chart tyranny
- — 25 February, 2012 04:47
A myth lies at the heart of most corporate organizational charts that the boss is surrounded by a group of senior leaders who form the company's decision-making team. These top executives, as the myth goes, have the freedom to express their opinions at meetings that result in decisions that cover the spectrum from where to hold the annual corporate picnic to major acquisitions to staff reductions.
But when asked, members of senior decision-making groups say they don't actually make the big decisions together. "We're the senior decision makers, but we're not the senior decision-making group," said consultant Bob Frisch, who is a managing partner at Strategic Offsites in Boston. "There's an important distinction there."
Laying out the distinctions, why they matter and how to structure organizational teams in a way that is both more realistic and more productive are at the heart of Frisch's book, "Who's In The Room? How Great Leaders Structure and Manage the Teams Around Them," which was recently published by the Josey-Bass imprint at Wiley.
[See a video interview with Bob Frisch.]
"Let's say the boss calls the group together and there's a decision to be made," Frisch said. "I say, 'Your senior decision-making team doesn't really make the decisions,' and the boss says, 'You're crazy, Bob.' So I ask, 'When the decision is made do you stay there, do you stay in the room?' And the boss says, 'Well, of course, I had the team there with me.' And then I ask, 'If you have to be OK with the decision, have you really delegated anything to the team and what happens if they can't make a decision?' The answer is that the boss makes the decision. So really has the group made a decision? Sometimes in those discussions, you'd come up with a different idea, other options, etecetera, that you would talk about. It's not like they haven't added value. But if the boss is in the room did the group really decide anything of substance? Did the team really decide anything?"
What is far more likely to happen is that apart from those larger meetings, the boss will have discussions with and seek input from the real decision makers. Borrowing a political term, Frisch refers to this actual decision-making group as the "kitchen cabinet." That group will typically be comprised of a smaller number of the most trusted advisers and that is likely to include people who don't work for the company -- spouses, partners, siblings, parents, close friends, for instance.
Frisch uses another of several political examples he offered in the interview, recalling how President John F. Kennedy relied on the advice of his brother, Robert, during the Cuban Missile Crisis. At the time, Robert Kennedy was the U.S. attorney general, so he was part of his brother's cabinet, but his position was not one that would typically be involved in the sorts of issues that were in play during the crisis. "Bobby Kennedy time and time again was the person Jack turned to. He was the attorney general, but he was also his brother, his confidante. Bobby was absolutely in it to watch his brother's back."
That's what makes such confidantes so valuable. "What drives their thinking is what will make you the most successful. They are completely motivated by self-interest" of the person who has to ultimately make the decisions, Frisch said.
After 30 years of work as a strategy consultant, Frisch has consistently found that so-called decision-making teams just don't operate the way most everyone believes the do. That fact can lead to real issues in a company. Fictionalizing a real-life scenario, Frisch outlined a decision-making situation involving a company with businesses in a number of different markets, including one that made electrical components for a variety of industries, with a heavy presence in Europe and Scandinavia in particular. Another corporate business made military equipment that did not include armaments, and the fact it didn't make bullets, bombs or guns was a big selling point in some nations.
When the Gulf War ignited, concerns arose because the corporate parent was a U.S. military contractor, but corporate communications could stand firm that no armaments were made. A while later, though, the corporation began to consider buying a company that makes laser-guidance systems for bombs. The head of corporate communications was concerned that would create problems for some of the company's businesses and went to the CEO to express those. The CEO acknowledged that was an interesting point to consider, but said that there was a small group looking at the acquisition and that issue would be brought up.
That small group, though, found that the deal looked like a good one, it would potentially bring in a lot of money and the acquisition target would integrate well into the parent corporation. The proposal was then taken before the supposed decision-making team, which included the head of corporate communications, who was flabbergasted to discover how far along the plan had gotten and who spoke up at the meeting. "The woman says that the deal would create an identity problem that goes to the core of who we are and what we do -- we've been telling the Europeans for a decade that we are not in the armaments business," Frisch said. "But by the time she was able to bring up the concern [to the whole group] it was already barrelling along. She had to consider whether she should stand up to a locomotive going full steam or should she stand and wave her red flag as it barrels by."
The decision was made, but "the reality is that she didn't have any say in this one." Afterward, she also was faced with questions from her subordinates, who believed that she had been involved and who questioned her because when it was announced within the company that the acquisition was moving forward employees were told that the senior management team had agreed to it unanimously.
Such too-common situations can lead to enough internal conflict that company leaders will decide to bring in outside team-building experts of psychologists whose expertise is in corporate dynamics. "But the root case is not psychological," Frisch said.
Before explaining how to get at the root problems through restructuring, Frisch noted that team-building experts and psychologists can be helpful when the issues aren't actually process issues. How then can a leader tell when the issues really are psychological? "If they hate each other -- if they truly don't like each other as people or don't respect each other as people, you've got to fix that as a leader," he said of team dynamics.
But in the example he offered about the acquisition, the issue was clearly in the process, the question being at what point in the process should the concerns of corporate communications been raised, aired and processed. The answer is that has to happen early enough in the process for a full airing.
And that leads to the question of how best to structure decision-making teams. Frisch advocates for the creation of "portfolio teams" that sharpen their focus on issues important to the company that only they can resolve. What that looks like will vary depending on the company, but generally such teams will include a larger team that deals with more encompassing issues and decisions, and then smaller teams that focus in on specific aspects of the company. Portfolio teams can be permanent but there also should be temporary teams that take on specific one-time decisions. For instance, those can be created around a certain product that a company is developing and once that product is on the market the team can disband.
Ideally, Frisch recommends a couple of permanent teams within an organizational chart and "a lot of transitional teams" that do their work and then are no longer necessary. The company leader -- "the boss," as Frisch called that person -- should begin the reconfiguring process by giving a lot of thought to developing teams that best fit that person's individual style of leadership. After that, it's important to speak candidly and explicitly to the executive team so that they all understand why the changes are being made and how the company will be managed in the future, with that team refocused on the work that only they can do within the company.
For instance, departmental leaders who may have been on previous executive teams may not need to have a voice in the decisions they've previously thought they were involved in, but in reality actually were not. The fact that they were in the past may well have meant that a lot of time was spent hearing out their concerns at meetings while those with a larger grasp of the issues and a bigger stake in the process stayed silent because they knew as members of the kitchen cabinet they'd have the CEO's ear privately.
Rather than pretending that everyone always has equal say, company leadership should be honest that those with more employees in their groups will at times have a larger say and that their votes will count more. "They act like we're all for one, we're all for one, Kumbaya, but in some decisions we want people to have more weight than others."
Frisch said that he realizes the ideas in his book and the emphasis of his consulting work will run counter to what many organizations steadfastly believe about themselves. He seems to relish that idea, saying with a big smile: "I think we have an interesting, compelling contrarian idea that hasn't been talked about before."