The dangers of large organisations

First appeared in ‘CIO’ (U.K).

The CEO of an Organisation asks all Department Heads to send any spare money, resource back to the centre to fund one particular vital project.

Two weeks later the Head of IM has a meeting with a Divisional Director in an Operations team;

“That looks like a really sensible project. Maybe we can do something with it next quarter. “

“Why not now?” enquires the Divisional Director

“Well you heard all the spare resource has gone back to the centre. I won’t have any money until the next quarter.”

“Don’t worry about the money. I’ve some tucked away.”

Now I’m sure something similar wouldn’t happen to you. Well, I’m fairly sure if you work in an Organisation of less than 150 people. It seems that this is a magic number for Organisations. Based on research by sociologist Professor Dunbar this is known as Dunbar’s number. As an Organisation grows it seems that communication problems and hidden agendas emerge far more obviously when there are 150 employees (give or take 10).

It seems that once an Organisation grows and splits into various silos the problems multiply dramatically. A real tension develops for managers between the aims of the Organisation as a whole and running their own part of the business.

I worked in a large public company where one business area recruited 100 staff for a particular project that for a variety of reasons was postponed for 6 months. These extra staff was contracted for a year and were just sitting around doing next to nothing.

The Head of the area announced to the rest of the Organisation;

“Sorry – screwed up. I’ve 100 staff spare who would like them?”

The conversations with various managers when something like this;

“How much would these staff cost me?”

“Nothing. We’ve arranged to pay them from my budget so they wouldn’t cost you a penny”

“Who will write their Performance Agreements?”

“I’m sure we can work that out hen the time comes.”

“Where will they sit?”

“?”

“Who will they report to?”

“?”

“Forget it. Seems more trouble than it’s worth.”

This silo mentality is a huge blockage in Organisations. There seems to be a real problem breaking the walls down. The more established the Organisation it seems the tougher the walls. It gets to the stage where each silo is almost a self contained unit. Whilst there are real benefits here (operating as small business, good communications within the area, sense of pride in the silo ‘team’,) there are huge disadvantages as highlighted. The problems of communication across areas and sharing resources, people seem to outweigh the advantages. It becomes rare to loan people out, or move people. Budgets are guarded. The ‘centre’ becomes the enemy. For instance toward the end of the financial year large Organisations tend to look at budgets for specific areas. I’ve worked with Departments that would have a spending frenzy in March. When asked why they were going crazy buying far more pencils, paper clips, pens than they could ever use it was explained that if they didn’t spend their allocated budget then it would be cut next year.

When asked why they didn’t explain this to the finance section I was given the ‘you don’t know how it works around here’ look.

It seems that the values at the centre don’t apply to the Departments. There’s the ‘they’re not our values’ mentality. This isn’t necessarily just about a silo mentality. There is a problem with values. They sound good. No-one would argue with them but how far would people actually go to uphold them. In recent years there have been a spate of Organisations where the values seem to have been ignored by everyone – Enron, Parmalat, Shell for instance and I guess some of this is to do with a ‘silo mentality’. But for me there’s another factor here. It’s been identified as ‘social loafing’.

Try this experiment when there are a dozen or so of you in a room;

Get one person to clap as loud as they can.

Then get 2 people to repeat this. Then 4, then 8.

What you should see if you produced a graph of people v noise is a straight line. In fact what you see is a gentle curve. As more people join the group the less effort people put in.

In a more dramatic form there was the Kitty Genovese case. This was a case of a brutal murder on March 14th 1964 in New York.

For more than half an hour 38 respectable, law-abiding citizens in Queens watched a killer stalk and stab a woman in three separate attacks in KewGardens. Twice their chatter and the sudden glow of their bedroom lights interrupted him and frightened him off. Each time he returned, sought her out, and stabbed her again. Not one person telephoned the police during the assault; one witness called after the woman was dead.

The values in organisation are susceptible to social loafing I would guess. ‘I thought someone else would do it’ seems a common response to missed targets, values. Add this to a silo mentality and there are real problems……

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