Your Hierarchical Organizational Structure Is Limiting Your Employees and Your Profit! - Manufacturing with Heart

Your Hierarchical Organizational Structure Is Limiting Your Employees and Your Profit!


Well-known management guru Peter Drucker’s ideas about business culture raised questions and ignited discussion among managers in the 1980’s and 90’s. Drucker promoted his vision of corporation as a society where decentralized decision making become normal behavior.

These ideas around culture development have slowly grown in prominence with business leaders’ thinking particularly in the last five years.  Employee surveys and methodologies for engagement and employee satisfaction have been the hallmark of many Human Resource department activities to increase productivity and profitability. Yet recent Gallop surveys reveal that over 100 million US employees hate their jobs or are emotionally disengaged from their work. The focus on culture changes and engagement have provided some increases in productivity, profitability, wellness and innovation, but certainly not the promised results for the amount of effort and resources expended.

Again, in the 1990s, radical change ideas were filtering through the business world. Engineer and business writer, Michael Hammer, promoted the idea of replacing the traditional hierarchical organization of Vice Presidents, Managers and Supervisors with a Process-Centered Organization (PCO), a flatter structure of Leaders (Process Engineers and Coaches).  At the time, there was a lot of writing and discussion of Hammer’s work. Many academics and business leaders agreed this was the way it ought to be. The problem was there were no discussions about building a culture based on trust and nobody actually knew how to implement a PCO. Many companies have tried to implement improvements in either culture or organizational structure.  Most efforts have failed to get desired results. The question is why?

Improvements in productivity and profitability through culture development can take you a long way until structure gets in the way.  The hierarchical organizational structure with its controls and policies limits culture development and the desired results.

When organizational structure change and culture development are done simultaneously with patience and perseverance, it works. It takes time and longer-term thinking and planning, rethinking, execution and re-execution. Real change in this dual effort takes a minimum of three years. And it is worth it!

The hierarchical organization is structured around product line silos which dramatically limit the ability of employees to really be involved and feel connected to the people around them and needs of the company and its customers.

Process-centered organizations (PCOs) are aligned around processes which foster collective creativity and encourage teams to make their own decisions.

Managers are traditionally tasked with process improvements and people development. “Managers” are often better with people issues or process issues, not both. In a PCO, the roles of the stereotypical VP or Manager are divided.  Process Engineers define and monitor processes. They’re responsible for throughput, productivity, cost, and quality. Coaches counsel, support, build relationships, inspire, educate, mentor, discipline when needed, and provide training for employees. This structure creates a dual servant leadership model.

The priority of leaders of a winning process-centered organization is to lead change by effectively communicating with all employees and all teams.  It’s important that leaders focus on both on individual and team development, teaching and listening and making supported decisions and doing it again.  All this is done from their hearts with a base-line level of trust in everyone and in the direction headed.

At the same time, obsolete policies and rules have been used to control and manage employees. A shift in mentality from managing people as machines to leading people with trust opens collective creativity within the organization.  Rather than rules about what you can’t do, work with employees to develop and clarify tasks, expectations and behaviors to create a great collaborative culture.

A PCO functions well at higher individual developmental levels. Change efforts for cultural development include self-awareness assessments such as Myers Briggs Type Inventory (MBTI), learning about basic communications (including body language), and how to give and receive positive and critical feedback. Individuals learn more about and understand themselves and other people better, resulting in more effective communications.

Environments of care and autonomy foster sustainable involvement, loyalty, pride, and gratitude. Customers, the company, and employees win.

When you are ready to start winning, call us!

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