Sorry, Your Org Chart is Dangerously Obsolete

For many people, our workplaces are where we go to find a sense of purpose and belonging, where we look for ways to make a living, make a positive impact on the world, and leave a legacy. However, I would contend that many of the organizations where we currently choose to work are making us sick.

Researchers have determined that workplace stress endured by those with job insecurity and high work demands causes roughly 30,000 deaths in the United States each year. In all, 62% of workers say that their jobs are their primary sources of stress, while 1 in 4 workers have taken a mental health day off of work to cope. Workplace stress costs companies additional expenditures of up to $190 billion dollars a year—representing 5 to 8% of national spending on health care. The biggest factor in these costs was, again, high demands at work which alone was responsible for an estimated $48 billion in healthcare spending by companies.

Workplace stress costs companies additional expenditures of up to $190 billion dollars a year — representing 5-8% of all national spending on health care.

Why Our Workplaces are Making Us Sick

A recent survey of 34,622 employees at 10 companies revealed costly health conditions (as a sum of medical costs and self-reported presenteeism and absenteeism). Among these, depression ranked first and anxiety ranked fifth. Moreover, individuals living with any mental health condition experienced more absenteeism days per year than individuals with no conditions, at a ratio of 31 to 1. Among all reasons for absenteeism, mental health conditions accounted for 62.2% of all days “out of role.”

What is making our workplaces so mentally demanding? How is possible that we’ve created institutions that are literally putting us in the hospital as a result of work-related stress?

I submit that we can trace the roots of such poor mental health outcomes to two major sources: (1) our organizational charts and (2) the business management practices that flow through them.

We still largely rely on the kinds of organizational management models used 160 years ago in the thick of the Industrial Age, when we made our way around town on horseback and the telegraph was your best bet to send a message across state lines. These models are also described as command-and-control, predict-and-control, or top-down systems of management.

These organizational models helped organize, execute, and maintain some of the first truly national and intercontinental infrastructure projects and, for their time, represented leaps forward in social organization. But in today's interconnected, global society with economies racing along at hyper speed and companies processing massive amounts of data, and with workers, in turn, rushing to master the increasingly interdisciplinary skill sets necessary to do their job well and stay relevant in the employment markets, these predict-and-control models of organizational structure are beginning to crack under the weight of the information they are unable to process and relationships they are unable to manage.

Like a piece of decaying industrial infrastructure, the traditional predict-and-control organizational management model has deteriorated beyond the need for maintenance and is now putting those who engage with it (i.e. employees, managers, owners, and stakeholders alike) at serious risk of harm.

How can we tell? The first sign of organizational deterioration is that Americans are quitting their jobs in record numbers.

The U.S. Department of Labor Bureau of Labor Statistics calls the category “Quits.” While the percentage of overall turnover has remained relatively steady, voluntary rates of quitting reached 2.2% of all workers in May 2017 -- a rate we haven't seen since January 2007, just before our economy was entering its freefall into the Great Recession.

Why are so many people quitting? Forbes Contributor, Aaron Hall points out that Mercer's What’s Working study says 32% of American workers are actively looking for a new job. The reasons for their unhappiness?

Hall also points to a study by Accenture on employee engagement, which reports the top reasons for employee dissatisfaction:

  • They don’t like their boss (31%),
  • A lack of empowerment (31%),
  • Internal politics (35%) and
  • Lack of recognition (43%)

Did you hear that? That's your organizational hierarchy and continuity cracking at its foundations.

Time to Evolve

Of course, I’d be completely ungrateful and ignorant to dismiss the entire course of industrial social organization as some failed experiment. Industrial organizational management is the reason I can eat strawberries in the middle of a frigid Northeast winter and why I am able to plug into any number of internet connected devices in my house at a moment’s notice with close to 100% uptime. Organizational charts are why, even while earning minimum wage, with one week’s paycheck I can hop on a plane and fly across the country to San Francisco and why I can count on fact that the running water in my house won’t poison me, and why, with all the potential geopolitical dangers out the in the world today, I can remain confident that no one will invade and occupy my city in the near future.

Industrial age predict-and-control models are how we have organized human capital to provide the majority of Americans with the basic elements of security, comfort, food, mobility, and knowledge that they could never dream of in 1855. The innovation of moving from agrarian communities where power and social control was held intractably over generations by landowners into industrial societies where new systems of social organization could be created in a matter of years through private companies was not an inevitability but something that emerged to dominate our collective human consciousness from the economic and technological realities of the Industrial Age.

The massive organizations created by this evolution have succeeded in processing so much information flow that, in order to perform at a sustainable rate, the pyramidal, top-down structure of decision-making no longer operates effectively without massive investments in supervisory management, which in turn is a concept more in line with operating an analog machine than cultivating and maintaining a biological system -- which is exactly what modern organizations are.

Industrial management techniques today are simply putting downward pressure on wages and working conditions for their frontline colleagues and crippling direct service to consumers. That trend line will never stop so long as we continue to maintain the same top-down structures of organizational management.

Today, the successes of the Industrial Age are now overwhelming our workforce, requiring that we make another leap in our collective consciousness. The challenge we all experience now will be to transform the new societies our organizations have created through their top-down management structures from dictatorial analog machines into responsive, living systems.

We will only accomplish the task of evolving our organizations into something much more adaptive and sustainable if industry leaders can make the choice to avoid leading hierarchically. Rather than consolidating innovation and decision-making power with a handful people, those organizational leaders who can distribute such autonomy through a legislative process to the rest of their organization will survive and thrive in the nuances and speed-of-light responsiveness of the 21st-century market. Given the struggles of nation states across the world with managing the complexities of their own society and given that (as of 2016) 31 of the top 100 economies in the world are countries and 69 are corporations, our companies, non-profits, and social impact organizations are, by necessity, the models for how we will organize a prosperous society in the future.

CustomInsight recently released a report covering 18,000 employees in over 150 companies in the U.S. and U.K., which demonstrated that -- for the 20% most disengaged workers in each company -- eight out of the Top 10 reasons cited for their disengagement were directly related to their management or senior leadership. For all employees, five out of the Top 10 factors driving their engagement were directly related to their managers and senior leadership. What were the rest of the Top 10 factors driving employee engagement or disengagement? Trust, teamwork, maintaining company values, and a respect for the ideas and contributions of employees.

Those factors don’t sound like they have much to do with on-the-job perks. They have much more to do with the desire to be part of a healthy community, of belonging and being trusted to do great work. Top-down management systems and even their softer, gentler cousins, consensus-driven organizations, make realizing these crucial needs very difficult. The former fails to provide workers with the autonomy they require to feel in control of their work, while the latter fails to provide a sustainable way to make decisions -- and both ensure that the authority to make any significant changes within the organization inevitably turns into a game of information asymmetry/political survival.

The Economic Incentive: We Work Within Crumbling (and Expensive) Management Castes

Professor Gary Hamel, ranked by The Wall Street Journal as the world’s most influential business thinker and described by Fortune magazine as "the world’s leading expert on business strategy", calls management “the least efficient activity in your organization.”

Why is this the case? For two reasons: the predict-and-control model of organizational management taxes the economic and social efficiency of a workforce. We mentioned the social costs of management in the previous premise, particularly when it goes wrong. With that amount of stress flowing through our organizations, the economic costs of traditional management structures are appropriately staggering and self-reinforcing.

Hamel notes in a 2011 Harvard Business Review article, “A small organization may have one manager and 10 employees; one with 100,000 employees and the same 1:10 span of control will have 11,111 managers. That’s because an additional 1,111 managers will be needed to manage the managers. In addition, there will be hundreds of employees in management-related functions, such as finance, human resources, and planning. Their job is to keep the organization from collapsing under the weight of its own complexity. Assuming that each manager earns three times the average salary of a first-level employee, direct management costs would account for 33% of the payroll. Any way you cut it, management is expensive.”

Any way you cut it, management is expensive.

Recent research by Gallup indicates that managers account for at least 70% of the variance in employee engagement scores across business units. Gallup’s study of employee engagement found that just 30% of U.S. workers are engaged, demonstrating a clear link between poor managing and a nation of “checked out” employees. The percentage of engaged managers is only somewhat higher than the percentage of engaged employees. Gallup research has found that 35% of managers are engaged, 51% are not engaged and 14% are actively disengaged.

Through their impact, Gallup estimates that managers who are not engaged or who are actively disengaged cost the U.S. economy $319 billion to $398 billion annually. 50% of employees have left their job to get away from their manager at some point in their career. The cost of replacing a lost employee? The Society for Human Resource Management puts that estimate at nearly 6 to 9 months of that employee’s salary, while I’ve spoken with HR leaders who put that estimate at closer to nearly double that employee’s annual salary.

Eliminating Management and Balancing Inclusive Processes with Autonomous Roles Creates Well-Adjusted Organizations

Predict-and-control management systems prevent our workplaces and ourselves from achieving our greatest potential. Yet, such management systems still dominate our workplaces despite our knowledge of their significant limitations. The Industrial Age models of social organization and management (which are still echoing the pseudoscience of Social Darwinism to this day) have psychologically hijacked our evolutionary tendencies to organize ourselves into small bands with some semblance of order, learn from authorities, and seek predictable rewards.

While top-down organizational practice and language are so ingrained in the modern corporate mindset that even organizations with socially conscious missions resign themselves to two beliefs:

  1. The idea that the best management system they can hope for is to be managed by benevolent superiors.
  2. That these superiors somehow -- through political wit and emotional intelligence -- find a way to project ethical behavior and a willingness to seek consensus, while hoping to maintain complete predictive and strategic control over a complex organization and/or team of human beings at scale.

The result? Employees experience a frenetic dissonance listening to their managers speak about their commitment to company culture while also feeling that they have lost control of their day-to-day work. Not only that, more and more research continues to show that bullying, office politics, racism, ableism, homophobia, sexism, and other mutations of social bias thrive in these kinds of top-down social hierarchies.

Find it hard to believe? The American Pyschological Association released a report entitled, Stress in America, which determined that employed White adults are slightly less likely than others to say that work is a very or somewhat significant stressor in their lives (62% of Whites say this, compared to 74% of Hispanics, 71% of Asians, 69% of Blacks and 59% of First Nations peoples). Whites also are significantly less likely to rate job stability as a significant source of stress (30% of Whites say this, compared to 55% of Hispanics, 52% of Asians, 50% of Blacks and 47% of First Nations peoples). One could also review Dr. Caitlin Rosenthal’s research on the link between modern management practices and plantation slavery. Or you could look at the results of 2015 study from the National Bureau of Economic Research which demonstrates that Black workers receive extra scrutiny from bosses, which can lead to worse performance reviews, lower wages, and even job loss. The report also reveals that discrimination can persist even if the productivity of blacks exceeds that of whites.

Yes, bias is a human cognitive reality and necessity. Our brains are constantly taking in a massive stream of sensory data and updating predictions and assumptions about the world we are living in at lightning speed. These fast-thinking systems in our brain help guide us to decisions and behaviors that are “good enough” to keep us personally safe and connected to the familiar. Yes, there are many organizations with wonderful cultures that embrace differences and operate with the intention of providing an inclusive environment for every employee. However, the odds are that they accomplish all this in spite of the structure of top-down, predict-and-control models that reproduce so many problems with blindspots and favoritism.

When it comes to making effective decisions in complex, heterogeneous communities, while also fostering creativity and innovation, the “good enough” decisions our brains most often had to make to survive in more static environments are pushed to their limits by the speed and complexity of our current era, what transpersonal psychologist Ken Wilber calls the Integral Age.

Social bias pushes us to deny facts we don’t agree with, make decisions with incomplete data, invest in short-term comfort rather than long-term solutions, and reject opportunities they haven’t previously been exposed to. Risk aversion, strict hierarchy, dogma, groupthink, and many other social behaviors that have been evolved to protect us and help us organize resources also drive us away from one another, make working in across differences difficult, concentrate decision-making power in ineffective places, reinforce the belief that hierarchical management is necessary, and drive down employee morale and loyalty.

We all struggle with blindspots of cognition and our hierarchical org charts tend to exacerbate these cognitive challenges in a rapidly changing world. But it doesn’t mean that biased, hostile, and disconnected workplaces are our destiny. In fact, the payoff for improving these cognitive functions and expanding our social point-of-view is enormous for any organization.

Social Organization Technology as a Service

The three most influential drivers of employee engagement in the CustomInsight study were confirmed in this particular order:

  • Respect for Employees, as in “This organization respects its employees.”
  • Fairness, as in “Everybody is treated fairly in this organization.”
  • Trust, as in “There is an atmosphere of trust in this organization.”

Respect, fairness, and trust, these are the foundations of effective employee engagement in our companies.

Yet, the preponderance of organizational behavior and psychological research will tell you that requiring employees to engage in "positive workplace culture" or diversity programs that ask them to respect differences, be aware of their own biases, act respectfully and trust others is actually counterproductive precisely because these employees, particularly managers, feel that these demands unfairly target them as "problems" and are arbitrary in their conception.

How do we get around this? We can start by admitting that such criticism is correct.

Our goal should be to stop telling our colleagues to act equitably and inclusively and, instead, create organizational processes and environments where all people, by default, are treated equitably, inclusively, and as autonomous adults with relevant skills.

My company (CTA) is joining a growing list of innovative organizations and thinkers that have a different vision for how to transform the world of work. It’s a vision that – just a few years ago – people might have thought was "soft" or unnecessary or a product of the "everyone gets a trophy" generation.

But, today, top medical professionals and a growing number of business leaders know this vision points down the path toward healthy, vibrant, and innovative workplaces -- a workplace where power is held not by the CEO but by a constitution, a workplace where collaboratively designed roles and legislative processes decide how work gets done (not titles), where people have accountabilities and projects to fulfill on behalf of their colleagues (not bosses).

We believe in building workplaces where employees have the true autonomy to own their roles, where they can make commitments through a desire for integrity and not in response to fear, and where the organization expresses its mission through operational processes that use logic and not politics to make an impact.

How to Start? Free the Know and Feel the Flow.

But how do we practice distributing power in an organization? Won’t the company just devolve into pure chaos with no real managers? How will this improve outcomes for employees across racial, gender, and generational diversity?

At CTA, we’ve seen that distributing power in our clients’ workplaces to processes and not titles creates an opportunity for all employees to differentiate operational from the personal relationships and other social dynamics governed by an ambition to power that so often “gum up the works” of the real connections we need to produce effective workflow. 

The work of Brian Robertson, developer of Holacracy (which is the most adaptive and operable non-hierarchical organizational management practice I’ve found in my last ten years of study) and founder of HolacracyOne, has been a massive influence on the evolving practice of organizational management across the world. In his book (which you should pick up immediately if you have read this article to this point) Holacracy: The New Management System for a Rapidly Changing World, Brian recalls his business partner Tom Thomison’s beautiful clarification of this differentiation by stating that Holacracy helps colleagues separate their “role space” from “personal space” and their “organizational space” from the “tribal space”.

What does that mean? In short, it means we can get work done by mastering collaborative processes and transparency for the purposes of work, not conflating the relationship between work and friendship to try and move projects forward through forms of office politics and shadow governance. This process of mastery can only take place across an entire company by practicing these skills in a non-hierarchical management structure.

I’ve noticed that, using our version of this process, which we refer to as “social organization technology as a service” orSoTech™, begins to solve one major challenge very quickly: information asymmetry.

How? First, SoTech doesn't require a leader to press the right buttons that run the "team machine" (i.e. all their direct reports). Instead, it imagines an organization to be like the human body, with different operational systems (nervous, digestive, reproductive, vascular, etc.) running autonomously but sharing information with each other freely with no central command.

In turn, the rules and processes of those organizational systems are dictated by a governance process led by a trained, internal SoTech facilitator (not a manager but more akin to a sports referee), who, in turn, relentlessly guards the process by which colleagues generate feedback and autonomous innovations while holding to certain limits -- like the requirement that colleagues must always seek feedback from those a decision would affect before making it and never make autonomous decisions that could have a significant impact on the financial health of the organization without consulting colleagues with relevant knowledge and experience. This governance process set the conditions under for how work can be done and how changes in the system occur, in much the same way that the conditions of evolution have provided a framework for the development of humanity.

Once colleagues are able to enter a level playing field with no management structure to serve as a bottleneck, challenges that have quietly plagued the organization for years are able to bubble up to the surface during operational and governance meetings.

In operations, people closest to those challenges by virtue of the role they occupy (e.g. social media marketing) and the domains that they own (social media accounts and content) are given the autonomy to propose projects that can solve challenges they identify by (1) deliberatively seeking input from colleagues the decisions will affect and (2) deciding for themselves what the best course of action is -- so long as the decision is within their defined role's accountabilities and domain.

How do we deal with role, accountability, or domain uncertainty? Like many other non-hierarchical management practices, if one colleague (let's call him Jim) needs support from another colleague (let's call her Tina) to execute a project, Jim can’t demand that Tina honors his request for support if it is not already an established accountability of that Tina’s role. In an operational context, Tina has authority over her role’s accountabilities. 

We will instead ask Jim, “Is that an expectation you’d like to have of this role?” and move this request to a governance process to determine whether to adjust the accountabilities of Tina’s role. This process works surprisingly quickly once it is put into consistent practice.

When people have the opportunity to work autonomously in an environment that provides them with the freedom to work on what matters, when it matters, and where they are challenged with no other option but to completely own their role on behalf of the organization (because you can no longer turn and point your finger at your boss in a CTA client company), colleagues are far better positioned to achieve deep focus and what psychologist and human performance expert, ‎Mihaly Csikszentmihalyi, calls flow.

Flow is only achieved through the relentless practice of a particular set of skills. At scale in a company of thousands of colleagues, the skills necessary to achieve collaborative flow are simply the skills required for implementing a social technology, which is far easier and more equitable than mastering office politics at a multinational corporation.

The Results

In short, they are powerful.

Companies like The Morning Star Company, a U.S.-based tomato processing company with 400 to 2,400 employees (depending on the season) and a 30% to 40% share of the North American market (If you have eaten pizza or spaghetti sauce in the U.S., you have probably tasted a Morning Star product), Patagonia, a US$540 million manufacturer of climbing gear and outdoor apparel based in California and employing 1,300 people, and Buutzorg (which means neighborhood care in Dutch), a Netherlands-based healthcare non-profit which owns 60% of the home nursing market, are all leading their industries while utilizing flatter, self-managing organizational management systems.

Companies and organizations that want to improve decisiveness and innovative capacity, reduce human capital costs, and promote diversity and inclusive decision-making in their organizations (all while preparing their companies for the sociological and biological limits of top-down management in the 21st-century) must take a hard look at utilizing the services of those leading the social technology as a service like Holacracy and the Self-Management Institute.

In just four years at CTA, we've been able to leverage distributed authority management models and social technology to vastly improve outcomes for corporate and nonprofit clients with operating budgets in excess of $50 million dollars, across key business functions such as operational workflow, talent acquisition, employee engagement, diversity and inclusion, and performance management.

What I enjoy most about our version of social organizational technology is the powerful workplace culture of inclusivity, openness, and integrity that it naturally creates. We drop the pretense of trainings and policies that require employees to treat each other in accordance with some imagined set of values, which are often undefined and are not actually agreed to. Instead, we concentrate on mastering processes that create transparency, trust, confidence, and good governance, processes that meet the true needs of the organization as defined by anyone who plays a role in its sustained success.

There is a clear way to create a more diligent, creative, productive, and engaged workforce that is laser-focused on their organization’s purpose and capable of adapting to the speed and complexity of the Integral Age. By focusing on a common commitment to distribute organizational power and give individuals the autonomy to do their jobs well, we are able to fulfill the the full purpose of their organizational roles and, ultimately, lead fulfilling careers that create the conditions for happiness and leave a lasting legacy.

Chris Conroy