BUS272 TB

480 Part 5 Reorganizing the Workplace
OB at Work
POINT
The End of Management
COUNTERPOINT
Management—at least as we know it—is dying. 60 Formal
organizational structures are giving way to flatter,
less bureaucratic, less formal structures. And that’s a
good thing.
Today, leaders are celebrated for triumphing over
structure rather than for working well within it. Innovative
companies such as Apple, Google, Facebook, Twitter,
and Groupon were born and now thrive thanks not
to a multilayered bureaucracy, but to an innovative idea
that was creatively executed by a flexible group of people
freely collaborating. Management in those companies
exists to facilitate, rather than control.
The new wave of eliminating job titles is a prime indicator
of companies learning to structure for innovation.
This trend is a reflection of the changes in job scope
that have come with increased technological savvy. For
instance, the fact that most managers do their own keyboarding
has dramatically changed the job of the office
secretary of generations before. The scope of what managers
do has broadened to include typing, taking notes,
and managing their own files/schedules, while the scope
of what secretaries (or administrative assistants) do has
broadened to include making social media posts and assuming
technical duties. The most innovative firms have
questioned whether they need job titles at all, instead
emphasizing collaboration throughout the organization.
The best companies have eliminated offices altogether
and encourage employees to mingle and form
teams according to their project interests. This suits
younger workers who never did want offices, who aspire
to work with the top players rather than report to
them, and who value flexible hours and work from home
options. Job titles are gone, roles are ambiguous, and
reporting relationships morph by project.
The talent is ready for the elimination of management
as we know it. The successful corporation of the future
will have a flatter organizational structure and accountability
based on performance.
There is no “right size fits all” approach to organizational
structure. How flat, informal, and collaborative an
organization should be depends on many factors, but
no matter what, management structure is needed. Let’s
consider two cases.
People lauded how loosely and informally Warren Buffett
structured his investment firm, Berkshire Hathaway.
Buffett spends most of his day reading and talking informally
“with highly gifted people whom he trusts and who
trust him.” This sounded wonderful until it was discovered
Buffett’s CFO and heir apparent David Sokol was on the
take. Sokol made $3 million when he successfully lobbied
for Berkshire Hathaway to acquire a firm in which he had
secretly acquired a significant stake. His insider manoeuvres
discovered, Sokol was forced to resign. Wouldn’t Buffett
have known Sokol was compromised if he supervised more
closely or had structures in place to check such “freedom”?
It’s hard to argue with Berkshire Hathaway’s past successes,
but they don’t prove the company is ideally structured.
Berkshire Hathaway is a cautionary example of the
perils of a structure that is too flat and informal. For
the benefits of a formal structure, look no further than
Honeywell International. CEO David Cote seems relaxed
and fun-loving (witness his Harley-Davidson rides and
office attire of leather bomber jacket and jeans), but his
hard-hitting work ethic is legendary. As the leader of a
global technology and manufacturing conglomerate,
Cote keeps a tight rein on the four industry divisions and
132 000 employees.
Cote’s control focus does not end at the executive suite,
thanks to a formal organizational structure with job titles,
security clearances, role descriptions … the works, at all levels
on the organization chart. At the factories, job titles are
painted literally on the floor to indicate who needs to be
present—and standing—at organizational meetings monitored
with a clock hand that turns red when 15 minutes is
up. Not only did Cote successfully merge three disparate
company cultures and more than 250 factories, but the
new Honeywell has climbed up the Fortune 500 ranks and
pulls in $37.1 billion in annual sales. The company’s profits
have increased faster than sales, in part due to Cote’s
insistence on freezing raises and hiring only two to three
employees for every four to five who exit.
The examples of Berkshire Hathaway and Honeywell
illustrate the strong need for management structure in
an ever-changing, diverse, worldwide marketplace.