Organizations are messy things, but it doesn’t have to be that way

Knowing what direction you’re headed in life really matters; in fact it’s part of what drives the human condition. Legend has it that The Buddha once remarked that ‘the greatest source of unhappiness in the world is unfulfilled expectations’. For me, this captures so well the essence of what’s at risk to one’s sense of purpose, commitment, contribution and creativity when you simply don’t know where you’re headed in life.

And when this occurs at scale, it can have devastating consequences for organizational performance and is one of the reasons why the science and practice of designing effective organizations in today’s ultra-competitive landscape is more important than ever, a crucial competence and area of competitive advantage for every high-growth organization.

Because I’m willing to bet that if, like me, you’ve worked in a dysfunctional organization, dogged by a lack of alignment, it usually led to a slew of horrible behavioral outcomes guaranteed only to slow the organization down. Like a ship at full sail with its anchor dragging along the sea floor, poorly aligned organizations are a breeding ground for behaviors such as:

  1. confusion where the matrix and blurred lines of accountability make it impossible for the left hand to know what the right hand is doing
  2. duplication of efforts where teams inside the same business solve problems in parallel blissfully unaware that another team is doing the same thing – or worse, knowing about it, but being powerless to do anything about it
  3. unhelpful territorial behaviors and bureaucratic politicking, not to mention the strain this puts on the energy required to run meetings and create endless powerpoint.
  4. performance management practices that lack focus and don’t actually align people’s strengths to the work that needs to be done, rewarding effort not impact.

The net effect of all this? Well, I still remember the prophetic words of warning Yahoo!’s then-CEO Terry Semel said at a dinner with senior European leaders I attended in 2004, when someone in the room asked him what was the one thing that kept him up at night. His response has stuck with me ever since. He took a moment and pondered before coming back and replying that “my greatest fear for Yahoo! is that as we get larger, we’ll slow down”. This tacit admission that scale brings enormous organizational risk can’t be over-stated for its significance and lays down a compelling case for why every CEO and CHRO must approach the challenge of maintaining alignment as they scale as their single most important priority. And Jim Collin’s treatise ‘Good to Great’ showed us that very few companies depressingly make it through and enjoy sustained success over a long period of time: most, in fact, fail.

It’s the Team

There are no such things as great organizations – only great brands made successful by a collection of teams. In other words, the critical unit of performance in every organization is the team. If form truly follows function, then this means that organizations should be designed in a way that specifically optimizes for this unit of performance to be at its best. And yet, they mostly just don’t: the vast majority of organizations are still organized along military style lines, in a downward cascade power, communication & accountability. Looking like a pyramid, they often optimize largely for the flow of information and control downwards. They often ignore the reality that many organizations do their most important work beyond the confines of the organization chart. Because no woman or man is an island – most of us work in projects that require access to people and ideas from a multitude of places in the organization.

Understanding how to align an organization across this complex multi-dimensional web of teams and teams-of-teams is arguably the greatest performance challenge managers face and absolutely must inform workplace design of the future. Enabling this to happen requires a new way of thinking about power, communication and culture.

This turns a lot of our understanding of how to design an organization on its head and requires courageous leadership from those CEO’s determined to unlock this multi-dimensional opportunity, and in the process, to build a different kind of workplace. Unquestionably, part of the solution to this question is technical. New software tools & platforms must be created to help us see and map the alignment process at scale, so that we can understand where people are, what they are doing, and how we can best optimize them individually and collectively in teams. But an important part of the solution is also non-technical and requires new approaches to thinking about how to clear the path to impact for people.

Essentially, it’s time to admit that people & culture don’t represent the ‘soft, fuzzy’ side of business, but actually are the are hardest of all challenges to work on, and the toughest of all skills to get right. In essence, there are hard skills and even harder skills. This is about the latter.

Figuring out the right approach is super hard, essentially because not many companies are built to address these problems, and very few people are showing us how to do it well. The emerging ‘Employee Experience’ movement calls for a fully integrated model for organizations where the Customer Experience (CX) and the Employee Experience (EX) are at either ends of the same value chain. Caring for our customers, must also mean caring for people, and workplaces must be designed with the dual intention of nurturing the best, most engaged talent and then clearing the path ahead of them so they can have maximum impact.

And when you study the handful of organizations that do this really well, and review the slew of data on what practices correlate most closely to meaningful performance outcomes, you can begin to conclude that understanding the messiness of people is the principle organizing layer to organizational effectiveness. As Sheryl Sandberg once remarked to me “Stu, organizations are all about emotions. Get that right, and the other stuff becomes easier to work on”.

Organizational success is therefore largely dependent on two areas of focus: the external locus is about building a product or service that gives you a unique competitive advantage in the marketplace and is distilled into achieving product/market fit. The internal locus is about knowing how to align the messy emotions, desires, expectations, fears, hopes and dreams of everyone co-existing inside the vehicle. Harness these two together, and the skies the limit.

So where can you start?

1. Define Your Psychological Contract

Academic Denise Rosseau first coined the term ‘the psychological contract’ as a way to describe the unwritten emotional aspects of the grand bargain each us form in our heads when we join a company. It speaks to those hopes, dreams, promises, expectations and ultimately, the mindset of the individual and is the major driver of your organization’s culture. But unlike a legal contract that leads to legal action when it is violated, the psychological contract leads the individual to pull back, punch the clock, disengage…and in its worse day can lead the individual to resign in their head, while the body continues to show up for work.

An essential feature of highly effective organizations, is their focus on defining what this is, and building teams and people practices that respect and enhance it. Like the articles of association that defines an organizations purpose and promise to its shareholders, so the psychological does the same for the people inside the system, charged with making purpose a lived reality. Netflix was an early adopter of how to think about this work, with their now famous treatise on culture. At Facebook, we did similar work in 2009 as we strove to identify what it meant to have an owner mindset.

Defining this honestly and accurately, warts and all is essential because it drives deeply important cultural alignment in a number of key areas: how you recruit, how you manage people, how you incentivize & reward, how you manage trade-offs…the list goes on. Because many, many decisions in the organization and certainly all the big ones have psychological consequences. And when you encounter a skeptical response to the value of this among your colleagues, consider this. If this is a vacuum in your organization, it will be replaced by the way your managers may have been trained by other companies, to their psychological contract, and in the individualized relationships (good or bad) each team has with the team leader & each other. And when individuals don’t know what to expect from you, then they’ll just make it up in their heads, be damned.

The psychological contract provides a powerful set of bumpers to help you along the way. If you’ve never done this work, make it a priority, and if you’re not sure how it is defined by the collective (in the absence of a written down document), just listen to how your recruiters are actually selling the bargain on the front end, and what leavers might be saying about it on Glassdoor on at the back-end.

2. Be Ridiculously Clear with People

There are two parts to this: firstly, its crucial to be very clear and transparent with people about what exactly you expect of them, and secondly, you have to be willing and able to tackle hard conversations in a timely way, and be honest & actionable with your feedback.

I would argue that if each one of the people in your organization can’t answer two basic questions that speak directly to what The Buddha was trying to say (albeit in a work context) then an organization is really just waiting on its place in the line to be another Yahoo!, largely consigned to the trash can of history, as a once-great brand and exciting place to work, who largely foundered on its inability to execute its mission clearly and efficiently as an organization.

These two basic questions are:

Why am I here? In other words, what’s the purpose of my job, and who does it serve?
What the hell am I supposed to be working on for the next X months?
And if your organization is changing and growing constantly, then these questions need to be asked at least every six months, possibly every three months or every month. Because if just one team member is in any way confused or misaligned about these questions, then the team is in trouble. How can you execute your goals if you and your team aren’t fully aligned on the purpose of your job and the inter-dependencies between them? Because that’s where the performance is actually happening…not on some abstract pyramid shaped org chart.

So when it comes to building successful organizations, this points to a key area where you need to build muscle early. Make sure there is clear line-of-sight both down, up and across the organization, and communicate and review progress of this regularly, since the only way to manage performance in a fast scaling organization is to do it in a continuous near-term way (month to month, or even week to week). And make sure you are being as clear about the ‘non-goals’ as you are the focus areas. This creates a powerful drumbeat that appeals to our desire to be part of something meaningful, and to be excellent at how we do it.

And as quaint as it still seems to be for some companies and some managers, the weekly check-in is THE most important performance management tool you have, bar none. I continue to be staggered by how poorly this runs in companies. Because when done well, the check-in is the performance review…not some end of cycle summary. It’s where you learn about the psychological condition of the employee, the roadblocks they need help with, the course correcting that may be needed and the learning they need to be better. There is no better way to manage near-term performance, so it’s absolutely essential to do this well.

This requires nothing less than a total commitment to transparency and feedback, which is why you have to teach everyone in the system how to communicate well – not just in giving tough feedback, but in how to escalate concerns properly, how to call out unproductive behaviors, how to run meetings effectively. It’s a core skill that is germane to the sum of all the interactions between people in the organization. So hire for it, onboard for it, train for it and lionize its importance to the bigger goals of maintaining alignment.

3. Point people’s strengths at the problem, not their weaknesses

It makes sense that people will do their best work in their areas of strengths, rather than their weaknesses and yet The Gallup Organization estimate that more 80% of organizations do not have a performance management strategy and engine to deliver this goal. Rather, they either focus implicitly or explicitly on weakness (as exemplified in the dreaded ‘competency library’) or they just don’t talk about this stuff at all when considering performance.

What’s sad is that this approach flies in the face of all we know about how much of a driver a strengths-based philosophy is to performance and how much of an enhancer it is to the psychological contract. Because when people work on stuff that they truly love to do, that really juices them, then the skies the limit. At Facebook, we found that when an employee could say they got to play to their strengths at work, they were more likely to be a high performer, more likely to be part of a high-performing team, more likely to stay with the company longer and more likely to report higher levels of overall fulfillment. A lack of opportunity to play to one’s strengths is also one of the biggest reasons why people say they leave Facebook. This reflects Gallup’s own research, published each year in their annual State of the American Manager report.

In his book ‘Standout 2,0’, author Marcus Buckingham defines a strength as a task or activity leaves you feeling strong. The critical component here is the emotion – not the competency. Because it’s only when those powerful internal forces that drive our passion, excited anticipation, feelings of flow and ultimately fulfillment are present, that you can be sure someone is going to stay late and focused, want to learn & perfect what they do, and seek out new ways to do more of that kind of work.

A strength is a competency, but a competency isn’t necessarily a strength without that crucial emotional piece. People can perform in areas of pure competence, but if you bank their role and the success of the team on it without bringing them a sense of joy and fulfillment as well, then you’re toast and the psychological contract is going to take a major hit. When this happens across whole teams and teams-of-teams, it points to the enormous amount of value companies are simply leaving on the table.

So hire people for their strengths, set OKR’s that specifically leverage their strengths, build and runs teams, especially project teams, around their strengths and grow people’s career in their strengths too. At this point, I should say that I’m not advocating ignoring weaknesses; if a weakness is derailing someone or getting in the way of all the good stuff their strengths have delivered, then you can’t ignore it and shouldn’t. What I am saying, is that you have to find the right balance and recognize the psychological payoffs to both approaches.

4. It’s the team stupid

As I said earlier, high performing organizations are essentially the sum of a collection of excellent teams. Building and leading teams effectively is therefore intrinsic to organization effectiveness and something you need to do well, particularly as building up and tearing down teams as the needs of the organization grows or changes over time is such a common need.

Building teams around strengths, onboarding your team, maintaining transparency and course correcting in the near term are all important ways teams maintain alignment. And given how important it is to manage the psychological needs of people inside the organization, it’s important to ensure you are appealing to another core human need, which is to maintain a sense of self-control. Giving teams a central voice in how they are organized, encouraging self-directed thinking and problem solving, and understanding and optimizing for the sentiment of the team are all antecedent practices that have been shown to drive team effectiveness.

And when I talk about the team, and say things like ‘your team’, I mean the teams you work in every day – which may or may not map to the organization chart. The reality is that you may be on several teams at the same time, which means it’s essential to map all the relationships you depend on, and the inter-dependencies to other people and other teams. It sounds complicated, but it doesn’t need to be. A number of emerging next-generation business planning tools are doing just that. But in the absence of that, just having a solid OKR process which captures this at the level of purview of the individual is a great place to start.

Remember, people are human beings, not human doings – it’s really important that teams are properly chartered, properly organized and properly led in order for the people inside them to know what is going on, and how they best can make their contribution. I run an exercise with client teams called “this is my jam”, where we share our most valuable and important strengths with each other, so the team knows them and crucially, understands when to call on them, and when not to.

One final point here before I move on: it’s essential to understand that when teams get too big, when managers or PM’s have too many people to directly manage or coordinate, social cohesion and alignment suffers. Amazon famously talked about the ‘2-pizza rule’ as a way to challenge unwieldy sized teams by simply saying that if there were more people in the room than can eat 2 pizzas, they may have too many people. Pay attention to spans of control, since much beyond 8:1 gets really, really hard for managers and when you’re into double digits, the employee experience and need for clarity suffers.

5. Be an orchestra conductor, not an air-traffic controller

The traditional model for org design, the pyramid, is a forcing function for a certain type of leadership behavior: one that is top-down. Managers exercised power in a downwards fashion like air traffic controllers, sitting in a high tower looking down on the planes on the airfield below. In the organization I have been describing, this would be a disaster, because it would narrow the knowledge and collective wisdom around the question “what should we do?” to one person. And if that person is removed from the projects and the day-to-day that each person in the team is working on, or doesn’t have some skin in the game either because they don’t understand the subject matter or don’t have a role to play in getting the work done, then they can easily slow teams down, not accelerate them.

A better more useful metaphor is that of the orchestra conductor. The conductor sits in the team and is charged with bringing each unique sound of each instrument to bear at the right moment to create a beautiful collective sound. This visualization enables us to see the implications for decision making, problem solving, pivoting, and focus inside teams in a completely different way – and the role the manager plays in making that happen.

Because this democratizing process has the power to motivate teams in a powerful new way and change how we see the role of the manager. I’ve shared more about this in other blog posts, but I have seen time again, how effective organizations also have a clear strategy for manager effectiveness. Because a free shuttle work and free nuts to eat mean nothing if your manager is a jerk, disconnected or technically out of their depth. The manager trumps the brand when it comes to how people think about what has the most impact on their performance.

This means it’s probably not wise to promote or pay people more money to become a manager as you risk incentivizing the wrong desire to be a manager (to make more money seems a really bad incentive to dangle in front of a fantastic individual contributor). If you find people who are passionate about managing others and have the strengths to do it, you won’t need to pay them any extra money. Likewise, make it easy to not be a manager, by creating dual career tracks and creating structures & practices that enable important leader voices outside the organization hierarchy to be heard.

And train your managers – on how to understand their people, and to learn best practices from each other for how to drive for impact in the manner of the orchestra conductor. Select your managers very carefully (ideally from within) and make it easy to step back into an individual contributor role if a manager struggles in the role. And finally, give the manager enough resources to invest in building an ‘esprit de corps’ amongst the people they lead, encouraging every team to deepen the appreciation for each other – their values and their strengths – and investing in growing the team and celebrating important wins.

6. Keep iterating, and don’t lose sight of the bigger picture

Your organization is never static – like any organism, it’s changing all the time, as people join and leave teams, as new teams go through the cycle of birth and death. This organizational plasticity means its crucial to hire people who not only understand their role and have the strengths to do it well, but also have the mindset to remain not only resilient to change, but are able to actually harness it and see it as exciting and a basis for learning.

This means you have to commit to building the capacity for you to understand what is going on and be able to pivot quickly and transparently when you do. As I’ve already argued, clear line-of-sight is essential here, but since it’s people doing the doing, I think it’s also helpful for teams to develop norms of behavior – a charter if you will, for how members of the team will treat and interact with each other. In particular, people need to be treated with respect and dignity if they are to embrace these practices, because a lack of it will breed distrust and a lack of psychological certainty & safety – both highly damaging phenomena when it comes to performance. If you’re going to align each person in the team to OKR’s that leverage their strengths, you have to align their behavior towards each other too.

And whilst access to good data, well-constructed teams, great managers and clear expectations are all hallmarks of effective organizations, so too is a strategic approach to thinking about the functioning of the organization as a whole. Although performance happens in teams, it doesn’t mean that constant strategic review and adjustment isn’t important and valuable too – essentially, you have to do both – enabling transparency and control from the bottom up, and reviewing and communicating vision and go-to-market strategy from the top down.

In their seminal article on organization design, psychologists Jay Galbraith and May Kates advocate for a simple organizing framework, known as the STAR model to guide organizations thinking in this strategic space. They argue that organization effectiveness is determined by five organizing principles common to all organizations. Knowing what are the right questions to ask in order to know whether you have an organization fit for purpose is crucial to achieving alignment at the strategic level.

These five elements and the questions important to ask in managing these top-line issues help to create the level of strategic and visionary alignment necessary to compliment the work done at the team level. They argued that each of these elements are part of the same 5-pointed star:

1. Strategy

What is our fundamental purpose?
How do we differentiate ourselves?
What are our strengths & weaknesses?
2. Structure

How are we best organized?
What are the key roles?
Who has power & authority?
How should people & teams be best managed?
3. Process

How are decisions made/how should they be made?
How does work flow between roles & teams?
·What are the mechanisms for collaboration?
4. Incentives

How do we incentivize performance? (monetary & non-monetary)
How is behavior shaped by the goals?
How do we assess performance?
5. People

What employee experience do we want?
What knowledge & skills do we need?
How do we best develop our talent?
What kind of culture do we want to support this?
What underpins this is the principle goal of alignment and transparency at all levels required to ensure everyone has the same context and feels like they’re pointed in the same, right direction. So asking these important questions shouldn’t only be the preserve of the executive team – bringing valuable voices into this discussion from all levels of the organization helps to uncover unseen land mines, foster an ownership culture and ultimately, strengthen the grand bargain that exists between each person and the organization as a whole.

Conclusions

Scaling organizations is really hard work – I remember vividly the Bugs Bunny cartoon where Bugs sat at the front of a runaway train, frantically laying down the tracks in front of the train to keep it moving. Whilst hilarious as a cartoon, it’s also a pretty powerful metaphor for the challenge of scaling companies. Keeping things from skidding off the rails is subject to any number of variables, many relating to markets, the competitive landscape, product or service quality. But when it comes to organizations themselves – the vehicle you’ve built to deliver against your purpose and goals, there can be no more important priority than to consider the implications of your decisions on the psychology of your people and their subsequent behavior.

So be a scientist of people’s behavior, both towards your employees and your customers. Recognize that people spend half of their lives at work and so build an organization around them that enables them to feel good about the enormous commitment of time and energy they spend with you. And remember that the cost of papering over the cracks or worse, ignoring the needs of people inside the system will absolutely have consequences for engagement and retention. Make these elements an important part of how you run and measure the business. Challenge traditional assumptions about people & managers, demand transparency and honesty, and above all, remember that the critical part of the employee experience are the teams they work in and are part of day in, day out.

By Stuart Crabb

Stuart Crabb is a Partner at Oxegen Consulting LLC

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