The link between Organisational Structure and Risk Averse Thinking

Why is it that the bigger the organisation, the more bureaucratic and risk averse it tends to become?

It has to do with traditional hierarchical/management principles of splitting accountability away from the person who is responsible for the delivery of the outcome. In traditional organisational structures, managers are accountable for the actions and behaviours of the workforce which works for them. This leads to management, with support from HR, putting in place 'safeguards' to protect their own back, as - in a Blame Culture - holding accountability can lead to being scapegoated for inefficiencies further down the line.

As the organisation grows, the gap between accountability and responsibility becomes wider with more management layers where the person at the top becomes accountable for all the people who work within the organisation. With layers of delegated accountability, more and more safeguards, policies and procedures are produced to set behavioural expectations to protect those who hold accountability. At the front line however, the policy and procedural expectations translate into total paralysis as staff are overwhelmed with behavioural expectations coming from all directions and as such they fear to act, which actually leaves the person accountable even more open to risk. This often leads to a 'cycle of ever-increasing control'.

This splitting of accountability and responsibility when working with adults leads to a (often dysfunctional) parent-child relationship, or the organisational equivalent of 'carrot and stick' approaches and command-and-control management styles. It also makes performance management and disciplinary practices instigated by managers highly subjective and one-sided.

As such the size and structural design of an organisation has a significant impact on the behaviours of the people working within it.

So how can this be changed?

There are a number of solutions, which depend not only on your organisation's size and structure, but also on the culture, leadership and risk attitudes across the organisation. Here are just a few:

- make a conscious choice to commit to building trust across the layers of your organisation
- commit to changing your organisation's culture from a Blame to Learning/Innovation Culture
- delayer/flatten your organisation
- build multi-layer and multi-disciplinary collaborative innovation teams
- 'lean'ify and simplify policies and procedures, turn them into helpful guidance
- help adults to hold themselves to account through coaching and mentoring
- identify the right leadership style for your organisation
- make risk attitudes visible
- devolve control to teams/departments

Please share below your thoughts, case examples or other possible solutions to reducing bureaucracy and risk aversion in organisations.

Want leadership? Turn the hierarchy on its side ...

Many organisations of various sizes are built on hierarchy and driven by status, encouraging people up the organisational management ladder. Managers are however set up to fail as not one person can be responsible for another person's choices and actions, let alone a group of people.

In recent years there has been more emphasis on 'leadership' and many discussions and articles have been written about the difference between management and leadership. The main difference between the two in my view is status within an organisation. With leadership, the level at which you operate in an organisation is not important. Anyone can show personal leadership and be a leader.

Is not the biggest barrier to leadership hierarchy? There is plenty of evidence that managers are not necessarily the leaders employees follow in an organisation. Managers seek compliance with processes and manage the  performance of others, while leaders aim to bring out the best in others and empower them to take personal responsibility for processes and performance, and develop more leaders.

So how do we change the design of the organisation to encourage personal leadership and personal responsibility? Organisations have been built on 3 disciplines, namely Strategy, Planning and Operations. In hierarchies these disciplines sit from top to bottom. In larger organisations, hierarchies are taller with duplication of disciplines, often leaving front line managers with nothing else to do but micro-manage staff leading to productivity paralysis, lack of innovation and high staff turnover.

So do organisations really need layers and layers of management in order to be productive, or do the layers create barriers to productivity and creativity?

What would happen when we turn the hierarchy on its side so the Strategy, Planning and Operations sit side-by-side?

- Would collaboration be easier?
- Instead of money and status, would organisations be driven by strengths, passion and empathy? (See video below)
- Would improved collaboration mean higher personal responsibility for actions?
- Would there be a flatted pay structure which benefits more people? (See video below)
- Would organisations turn into communities of action?
- Would it be easier to innovate?
- Would there be improved trust and respect between the different disciplines?
- Would your workforce be more autonomous and as such self-motivated?
- Would improved collaboration mean leaner and more sustainable solutions?

Makes sense, right? I'd welcome your thoughts.

Relevant video:
Paul Piff: Does money make you mean? - http://on.ted.com/raqw