Help! We’ve Spun off the Organization Chart and Can’t get up!

What in the world is going on in this company? Who does what? Who reports to whom? Who is responsible? Who can answer my questions? I have never seen anything like this. One thing is eminently certain – middle managers have taken the fall again

The organization structure no longer resembles a pyramid. It can now best be described as being made up of three parts with a pyramid at the top. Lying beneath this structure there is a small sphere that is spinning out of control. Under that sphere is a huge elongated rectangle.

It’s all part of the newest strategy for reorganizing our entire corporation into business units. Of course this reorganization means bringing on lots of new high powered executives as well as their assistants and cronies.

It all seemed to happen overnight, after some senior level meeting somewhere. Oh sure everyone got the all employee memo’s announcing the arrival of Mr. X and Ms. Y as well as notices of the endless reorganizations and title changes. But so many things were happening at once that no one really had any time to think about it. To make things worse, the cost of all this new “heavy artillery” had to be offset somewhere. You guessed it! Many long-time and knowledgeable employees and managers were sacrificed in short order on the altar of the new business model.

In the old days, a company was structured by function. You had a president or CEO. That function determined the strategy, set the agenda and coordinated the senior staff that represented the major functions of the company: Sales, Engineering, Manufacturing, HR, and Accounting etc. Each in turn, contributed to this overall strategy by managing their groups to attain the desired overall company goals. The senior staff was encouraged to work together toward an overall end. It was supposed to be all for one and one for all. Reporting lines were clear, simple and easy to follow.

Through time, companies started buying other companies and putting together conglomerates that could leverage combined resources and reduce overall costs. This was sometimes painful but a natural result of market capitalism. Maybe they added a headquarters unit to the mix but the organizational structures remained basically the same. Reporting lines were still clear, simple and easy to follow.

But something new seems to have occurred here. I will refer to it as the “virtual company” concept. Now enter the “Business Unit Leaders,” the new mini-CEO’s who are each managing a product, product line or group of customers. Each leader has his or her personal strategy and agenda. They are charged with leading their business units as if they were separate business enterprises. In a perfect world, this would all work out fine provided that each leader had a dedicated team to support these agendas. But of course it’s not perfect world! It’s the corporate world and there is only one “real” company with a finite set of resources. Now one might think that these mini-companies would exist only as “virtual” enterprises created on paper by the accountants. Not so fast! This time the finance folks aren’t the only ones with headaches trying to figure this all out. Although, supposedly “virtual,” these enterprises are producing nightmares for everyone else.

The Business Unit Leaders (BUL’s) report to Corporate CEO as do all of the other traditional functional heads of the company. Beneath that layer are the AVP’s and directors whose allegiance may lie with a function, a business unit, or whoever brought them into the company. This is the pyramid at the top of the new three part structure. Within the elongated rectangle at the bottom of the structure lie the salaried and hourly employees, the people who perform the real day-to-day work of the company. Squeezed between the pyramid and the rectangle is the spinning sphere containing the remaining middle-management.

The dust had not even settled from the reorganization when the turf wars and the power struggles for resources began. The Business Unit Leaders and their minions started getting into the pants of the purchasing and operating functions claiming that these functional areas were really there to support them and therefore their property. The functional VP’s fought back because they had overall responsibility and were held accountable for the functions. Then the BUL’s began to argue amongst themselves as to what product lines or customers belonged to each unit. Accommodations had to be made to all parties to keep everyone happy. The employees in the large rectangle had to be divvied up.

God forbid that those within the pyramid actually get involved in the day-to-day work of the company. They are the great thinkers after all and their personal staffs exist to support them. Since someone has to be held responsible for those inside the rectangle, it is the middle managers who have become the pawns in this new game. The Orgchart software has been working overtime ever since, of course with fewer boxes left to move around.

The functional middle managers that are still around now find themselves reporting to one or more business units as well as their functional leaders. This means reporting in to two or even three different individuals at various locations some of whom might even be at different levels within the organization. There are hard reporting lines, strong dotted lines and weak dotted lines. Managers once in charge of departments that performed a particular function, now see their staffs split and serving different business units and even performing different functions. Some of their former subordinates still sit at the same desks but now report directly to a manager a thousand miles away while another who sits right next to them reports to yet a different manager. This is all compounded by the fact that the BUL’s have been allowed extricate themselves and their personal staffs from corporate headquarters and manage from remote locations. It has become a “virtual” three ring circus. We have now become a so-called “highly-matrixed” organization. Reporting lines are no longer clear, simple or easy to follow.

One can imagine what it is like to try and figure out who does what or who can answer a question. Not only are many of the veterans gone from the organization but the “newbie’s” in the pyramid are not even aware of the valuable knowledge and experience that left the company with them. No matter, they just expect those that are left to fill in the voids as if nothing had happened at all. Managers now spend the majority of their day switching from one conference call to another. The rest of the day is spent trying to figure out what is going on. The amount of once productive time now wasted on duplicate efforts and wild goose chases is tremendous. The pyramid seems to have an insatiable need for information about the smallest details.

Finance has been pulling out their hair trying to account for all of this on a business unit basis. With employees on different payrolls, in different locations and constantly changing on the organization chart, keeping up with the dynamic is a massive undertaking, particularly with a reduced accounting staff.

Even HR seems to be confused and succumbing to the “matrix.” The annual performance appraisal system has now been amended to allow a manager to be reviewed by multiple “superiors.” Personality clashes, conflicting directives and unclear objectives abound. Those inside the spinning sphere are getting dizzier by the day. Many are beginning to spin off into space.

I believe that there is a biblical quotation about the inability of serving two masters – maybe it should have said “multiple” masters. Maybe the corporate bible says something else.

Most employees feel as though the company they once knew has just disappeared and been replaced with a tremendously confusing and complex bureaucracy run by remote controlled robots. What greater good was to be accomplished by all of this? Change for the sake of change? Was there any planning for all of this? If you’ve read “160 Degrees of deviation: The Case for the Corporate Cynic”, you know that I have always given a company 20 degrees for having good intentions. Is this just another example of good intentions gone awry?

I am no economist or organizational theoretician. I am certain that I will be criticized for not seeing the “Big Picture” here. Guilty as charged! I only know what I have observed and it is not good. We’ll just have to let the record reflect the opinion of “The Corporate Cynic.”

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2 Responses to “Help! We’ve Spun off the Organization Chart and Can’t get up!”

  1. LoveSimonandGarfunkel Says:

    A very deeply insightful article. I dare say that much of this wisdom was perhaps earned by actually working inside the “spinning sphere” ‘neath the pyramid?

    I recently dusted from off my feet the mud from the sphere of one of those “Business Unitized” corporations. Its a leading Semiconductor company. When I joined them I was a little puzzled by the denizen’s constant use of the words “horizontal” and “vertical”. I was told that if you are in a “horizontal” then life was horrible because you are delivering your goods to all the BUs whereas life in a “vertical” was easy since your product went straight to an external customer.

    I was in middle management as well, trying very unsuccesfully to deliver to all the BUs whose requirements most of the times was orthogonal.

    Try throwing in “Offshoring” into the mix and you can hear the words of Hamlet’s ghost intoning

    “I could a tale unfold whose slightest word
    would harrow up thy soul
    freeze thy young blood….”

    Thanks for writing this article – it soothed my festering sores somewhat

  2. thecorporatecynic Says:

    You’re more than welcome mon ami. You are correct. I have either experienced or observed virtually everything I write about.

    One of the purposes behind this blog is to bring some awareness to these issues. There is also a moral to the stories: If you wish to be a good company or good leader, read these posts and DON’T you what these companies and poor leaders do!

    Drop by as often as you’d like. I appreciate your comments.

    Cheers!

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