The Organisation that Silos built



The organisation that Silos built.

What is a silo. ?
It is a long tubular structure mainly used for storing grain, sugar, cement etc.
Observe and you see that Silos have an opening only at the top and another opening at the bottom.

Most organisations structures are built like silos, tall structures encapsulating a group of people and activities which are called departments, sometimes they are also called organisational verticals. The silos only connect at the top and sometimes at the bottom.

At the top of each silo is the department head. Everything has to come in and go out through this person.

Silo's are structured linearly. Power and authority reduces as you go lower down the silo. At the top of each silo is a boss called the General Manager and then below that person there is Senior Manager, and so on until you get to the very bottom where there will be staff members and worker.

At the bottom of the silo, exist junior most employees and workers These are the people who have to 'perform', and do most of the leg work. Unfortunately it's the rule rather than the exception that the 'dead load of management' exerts tremendous pressure and bears unnecessarily heavily on them.

The department head or business vertical head, staunchly and aggressively protects their silo, which represents their territory and power at all costs. All entities within a silo must pay allegiance only to the silo chief. Only with the boss's permission can they exist, to function and serve their organisation and stakeholders.

The reader may find the above description a little excessive. Can this explain why Government organisations and departments are a power unto themselves and fail more often then they achieve?

Let us take a situation and see how organisations structured as silos or departments function.

Situation 1: Worker Ravi in dept A needs a resource or information to do his job but does not know where to get it from because he is locked into this silo. Ravi can only approach his senior and that person to her superior and so on. the requirement goes up the silo until it gets to the department head who may be able to help out, but only after he is convinced that the requirement is genuine etc.

Situation 2: Worker Ravi in dept A needs a resource or information to do his job, he knows he can get this only from another employee called Meera in Dept C. Ravi normally has no way and no authority to communicate his requirement to her directly. His request rises to the top of Silo A passing through sometimes 7 to 10 levels before he reaches the department head. At each level there are questions that have to be answered and justifications have to be given. Then the request goes to department head of Dept C and then it slides down to Mira in Dept C. The resource or information is then sent via the same long, tedious and inefficient route

Normally the desired resource will not be likely be provided, and if provided will not be what was requested or it's incomplete. Several things can occur as a result.

In the case of employees the following;
• Ravi gives up and the required task is left undone.
• Ravi soon gets burnt out , realise the futility of trying to get anything done.
• Ravi concentrates on schmoozing the boss, pretend to be busy doing something useful and can't wait to get home.
• Employees are generally de-motivated.
• No initiatives are taken , because it is safer not to do anything rather than attempt something and fail which might cost them a promotion or worse your job.
People start to fossilise within the silo and creep up the silo at a glacial pace.

Following are outcomes which impact the organisation as a whole;
• If the resource is made available the delay has added to costs and dissatisfaction with customers vendors, colleagues and even statuary authorities with unpleasant and undesirable consequences.
• Clear us versus them syndrome sets in. An atmosphere of suspicion and confrontation is commonplace.
• Communications are formal. Everything is put down in writing with a and large number of remotely connected individuals are also marked copies.
• Walking across or picking up the telephone to speak with a colleague or counterpart is unlikely and frowned upon.
• Mountains of memos overflow from mailboxes and tables. No document is ever discarded because it is quite likely that there might be need of proof of innocence or demonstration of their efforts and sincerity no matter how ineffective it was.
• Employees unwittingly become the organisation's biggest enemy
• Meetings increase in frequency, and participants, yet they are unlikely to achieve much except to let people get a lot off their chest.
• More meetings, more minutes and notes , more reviews, more follow up and not so much output.


Here is a personal and highly visible example.
We four brothers entered the family business at about the same time all in 1981. Working as second generation owner and also as managers each started handling different aspects of the organisation. Varinder started managing Marketing and Purchasing functions, I managed manufacturing, maintenance, and human resources activities as did Parvinder but at another facility. Paramjit managed the finance and legal related matters. Each brother was a strong personality and built teams under them.

We brothers discussed policy and operational issues all the time right from waking up till we dropped off to sleep. We had a lot of love and respect for each other's capabilities and did co-ordinate all our activities between ourselves. Issues were tackled speedily and effectively.

As the organisation grew so did the silos increase under each of us. We bought in more and more employees, managers and 'professionals', the silos grew ever taller. As expected with silos we had not provided any openings in the middle. As a result we were handling an ever increasing work load traffic at the top.

We screamed at staff to settle matters amongst themselves, for their lack of initiative, their incessant whining seeking more autonomy or more support etc. Hard work and commitment can achieve only so much and not much more. We had neither designed our organisation structure to be dynamic or open and therefore did not empower our people to take important decisions that they were capable of taking and should have been taking. . We were quarto centralised (four points of centralisation).

All non performance and excuses were pushed up and created flash points at the top. This lead to nasty arguments amongst us the top managements, severely straining our organisation and family relationships.
Yet we prospered, but the price we paid for by our health, sanity and inefficient use of resources was quite sad.

When the department head or key people are unavailable, the silo often fails to deliver the limited output at all, with matters piling up for decisions and action. So we Brothers or the key managers could never be far away from work for more than a couple of days at the very most. This makes people and managers and particularly department heads unable to enjoy a quality of life they deserve for they erroneously conclude that they are indispensable to the organisation.

This type of organisational structure and functioning is quite prevalent in the majority of organisations.

Look closely at your own organisation and see if you function as silos which are stifling your growth and creativity? Investigate if it is sapping the energy of your people. If yes then probably it's a good time to get rid of the silos.

Hang on! Before you run out to smash your silos and create a revolution that will consume you and your organisation, there are some things that need to be appreciated.

The Silos has the advantage of permitting a handful of people to exercise significant control over large number of people and resources. It is best for organisations that have no clear purpose, mission or targets. This is also preferred by owner managers who want to keep things on a tight leash.

Once you smash the silos and give people more autonomy and make the organisation more dynamic , it will be nearly impossible to put people back into a silo.

Just smashing a silo without alternate structures and systems will lead to a total chaos and even be fatal to the organisation. You will need to involve a process of creative destruction of the old system to effectively replace it with a new one.
This is where a good Organisational Development or Management Consultant working with the people responsible for Human Resources function within the organisation can contribute.

In a competitive and unforgiving environment Silo based management structure is a concept whose time has long passed.




p.s. I request your indulgence to propose solutions in future postings. This will provide time to interested readers to introspect, review, think and evolve solutions on their own.

Comments

  1. Yash Kapoor said;

    Yr post is really very much enlightening.
    Thanks for sharing yr experience.

    Best Regards

    YP Kapoor

    ReplyDelete
  2. For an organization that has started primarily as family owned the objective of an organization is pretty clear. It’s a means to an end. It started with the idea to keep ones family income going. For a few good organizations (about 1-2% I would say) it gains strength by means of people who start to associate with it. The organization becomes larger than the purpose it was created for. Not all organizations may have a vision but the power to deliver. It’s also a case of being at the right place at the right time. A case in example would be our organization.

    Till about 3 years back Kafila was failing miserably, disoriented and disillusioned. This is the organization created in 1970s by my grandfather and his 4 sons. Each chipped in with the best of their abilities and became successful in creating a brand KAFILA. The company which tasted reasonable success started to get entangled in its own web. The distributors started to have disputes with management. The markets started to shrink. Suddenly we lost focus and started in direction that came easy, Exports!!! We again had reasonable success in doing international business, but soon found that we are at disadvantage to Chinese enterprise. It became harder to retain customers. With Exports on the peril we started to wonder where we went wrong. Things were so bad that it became increasingly clear that we didn’t have it in us. There were signs of crack even in the family. My dad being the biggest glue all his life in keeping the family together found it unacceptable and started to take radical decisions. Decisions that were just right to bring the organization back to its purpose. The brand KAFILA didn’t lose its sheen and was still respected in the markets. Without taking credit away from my dad I think it was great luck that the markets opened accepting our products in a big way. Suddenly everything started to look very clear. Disillusionment soon got faded with enlightenment. In 3 years we are looking to create an organization that would be stronger I hope.
    In these times each one has realized that in making the organization relevant it’s important to keep decisions in its own hands. Our organization is pretty lean coz everything is controlled from the top and all elementary work is to be managed by staff. But in all this there is a problem. We are limiting decision making in the organization and your article is making it aptly clear why. Now herein is the dilemma, do we look to restructure the decision making process or do we continue to control everything by ourselves. I am of the opinion we need to divide the routine decisions from the strategic ones. Let the mundane decisions be managed by the people in the respective positions. It’s more important for them to develop the confidence and the feeling of ownership. Also it would take certain load off our back and make us dispensable for more important work. Important is that the organization should be as transparent as possible laterally for informed decisions. This is the task we need to entrust to create good communication channel both vertical and horizontal. If we are not mindful of the fact that we have started to create SILOS we would find it harder and harder for us in the future.

    ReplyDelete
  3. KS Dugal said;

    1. Good judgment results from bad experience
    2. Bad experience results from bad judgment
    3. Isn't hindsight is a wonderful thing, huh?

    4. I enjoy witty opinions [being an armchair kind of guy....]

    KS

    ReplyDelete
  4. Sudhir Ullal said;

    Gurvinder,

    I really liked this article and do agree with your thoughts in general on silos, especially the parts of the management overhead and the command and control structure.

    However, you did not point out the benefits of silos which to a large extent can run without any management overhead once the processes within the silo are defined.

    Each silo is responsible for a function within a process and can do it very well without the need for management oversight.

    Some of your thoughts appear to be tied to the manufacturing industry, however there are other variations that come into play with a service organization.

    Within service organizations, silos can rapidly scale up for volume and repetitive function very rapidly which cannot happen in an organization where say "engineering" and "operations" are combined. I can give you detailed example of where there would be complete failure if silos did not exist.

    One other point I would like to make on the example you put forward on government employees; "Can this explain why Government organisations and departments are a power unto themselves and fail more often then they achieve?"
    I believe this is more cultural than organizational and here are my example;
    - In France 90 percent of the students graduating from college want to work for the government and the preference is Paris. Why, because it is all found. You have more stature if you work in Paris than the "rest of the country" (provinces as they are called). The individual has regulated pay, regulated work and innovation is unknown. In the US you cannot find graduating student who want to work for the government!

    - I went to engineering college in Bhopal University and all of the local students wanted to work for the state civil services. The few who who were entrepreneurial set up their own industries not wanting to work for the State. I was in Bhopal a few years back for the 25 years celebrations and all my colleagues who worked for the State have done very well, relative to the entrepreneurs who set out on their own. By State, I mean Railways, Municipal and State organizations.

    The example of government you gave is prevalent everywhere and I believe requires a special type of person who wants to work for the government. These people would not succeed in the commercial sector.

    Oh well, my two cents. You did ask to provide other solutions and my solution is change management. Organizations should constantly change with the right controls in place. The leadership need to understand change and be able to explain to their constituents the reason for the change. Change is an important element of organization process and without it organizations become monoliths that cannot adjust to changing environments and as such tend to fail, ie GM, Chrysler, Bearingpoint but not KPMG, Lehman Brothers, but not AIG.

    Regards,

    Sudhir

    ReplyDelete
  5. Anish Poojara said;

    You are able to notice (and accept) what went wrong within your organization.
    Most people would not be able to accept that they did somethiing wrong.
    Thanks for sending.

    Anish

    ReplyDelete

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