Craig Bryant, Founder and CEO of Kin, and Emily Powers, Director of Operations and Finance at Fresh Tilled Soil, have joined forces to uncover the mysteries of the modern workplace. The following is the fifth chapter of an eight-part series featuring some of the greatest debates, struggles, and solutions surrounding how we work. Check out the entire series here.
“Organizational structure” is potentially one of the most nap-inducing terms within the lexicon of operations nerds. To put it simply: Organizational structure dictates how work gets done in your company – who reports to whom, who is responsible for what, and how information flows. Organizational structure enables us to put 400 people in a building and actually accomplish something.
In this installment of the Ways We Work series, I’ll share a brief (but fascinating, I promise) history of organizational structures, bringing us to today’s reality, a world in which employers must balance the demands of customers and shareholders, with those of their tenacious Millennial workforce.
Historically speaking, the US has progressed through five main phases of organizational structure. Phase one includes the period immediately following the Civil War, where the country experienced a boom of entrepreneurs forming their own companies (hmm, sounds strangely familiar). With the majority of these companies being start-ups, structure was really non-existent as founders and early employees wore every hat to get businesses off the ground.
Phases two and three occurred once many of these start-ups matured into highly successful corporations (think, railroads). In these phases, the field of management itself began taking shape, as the professional manager was born – tasked with organizing and bringing structure to the chaos of these growing enterprises. Organizations grew relatively hierarchical, siloed, and tall, with very clear reporting structures within every department. Centralization and chain of command were the dominant forces.
The period post WWI brought about phase four and a new type of organizational structure, where companies moved away from the rigid and hierarchical to a more decentralized structure. It was discovered that decision-making and organizational change were extremely difficult within the gigantic, lumbering hierarchies of prior decades. In the post-industrial economy, organizations needed to be able to make decisions and react quickly, and decentralizing into smaller, more autonomous units was the key to success.
In today’s globalized, technified, sprint-paced world, a company’s ability to bob and weave like Floyd Mayweather has a critical impact on its survival. The concept of decentralization has been taken to a whole new level. Long gone are the days of behemoth, sloth-paced, structures made clunky by mile-long chains of command. Today’s organizations need to be flexible and nimble enough to keep up with the demands of markets, customers and competitors – and to then upend everything again tomorrow. What does this mean for organizational structure? It means dividing into even smaller units with greater autonomy, and the reduction of traditional “management”, resulting in much flatter organizations capable of making decisions quickly.
These days, many have heard the magical tales of organizations like game-developer Valve, who operate without any formalized structure whatsoever. Want to make a hire? Go ahead, no need to ask anyone. I’m exaggerating, but it’s not far from the truth. In their employee handbook, Valve states, “…Valve is flat. It’s our shorthand way of saying that we don’t have any management, and nobody ‘reports to’ anybody else. We do have a founder/president, but even he isn’t your manager. This company is yours to steer…” Many companies are following Valve’s lead, completely eliminating management structure to create entirely flat organizations.
One of those companies was Fresh Tilled Soil. For about the first nine years of its existence, Fresh operated as an entirely flat organization. There were no managers, directors, or bosses. Teams collaborated to get work done and that was that. However, by the time the team began approaching 25 to 30 people, we started hearing fascinating feedback. We’d hear, “you know, I really wish I had more clear guidelines around X” or “I’d like to have more structure around Y.” The message was clear: The team needed a more rigid support structure around their performance and progression within the company, and accountability needed to be placed front and center. Within six months, we recognized practice area leaders as Directors, developed a highly sophisticated professional growth model, and established clear systems for performance evaluation and feedback. So far, the feedback we’ve heard from our majority Millennial team has been positive all around. The team is increasingly grateful for clearer expectations, firmer direction, and more frequent feedback.
In his book, Work Rules, Laszlo Bock, SVP of People Ops at Google shared a similar tale. Google’s founders deeply rejected management of any kind (and still do). Early on, they made the decision to eliminate all positions of power from the organization. Very quickly though, they realized they’d made a big mistake. Without the oversight of a central leader, teams and departments began to fall apart. Critical administrative work wasn’t get done and teams began lacking the direction, guidance, and feedback they needed to be successful. Sure enough, management was put back into place.
So why do Fresh Tilled Soil and Google (Kin too!) share this common historical experience whereby the team virtually begs for a more rigid organizational structure? I’d like to argue that the answer lies in the perfect storm of two key variables. First, our country is experiencing an entrepreneurial boom. Entrepreneurs are breaking free from the corporate rat race (and rigid hierarchy) to pursue their true passions and build companies on their terms – which usually involves rejecting any semblance of their former boss-filled corporate lives. They don’t want to report to anyone and they believe this is best for their employees as well. This is where variable number two comes in, and the final ingredient in this perfect storm: the character of the Millennial generation.
The Millennial generation is loosely defined as those born between 1980 and 2000. Take your pick of derogatory generalizations made about this (my) generation in today’s workforce: Entitled, narcissistic, overconfident, overly demanding of employers…the list goes on. Regardless of the level of truth to these generalizations, here’s what we do know. Millennials, very generally-speaking, were raised by highly attentive baby boomers who taught them they could achieve anything they want. Some have gone so far as to call this coddled group “trophy kids” because of their experience receiving unbridled support, recognition and reward as children.
Now that Millennials are all grown up, they expect the same level of attention, clarity, guidance, recognition, and reward in their workplace. Note to the HR department: this does not make us evil. What it does mean is that organizations need to ensure they have exceedingly clear structure and systems surrounding job performance and professional development. For Millennials, an annual or even semi-annual review is not nearly enough. They need to know exactly what’s expected of them now and where they are heading in the future, with feedback on progress shared at very frequent and regular intervals.
Now you begin to see the friction here – we have a boom of entrepreneurs who believe less structure is more, and a Millennial generation crying out for structure and guidance. Believe me, all is not lost. Today, successful organizations are able to combine the needs of both parties, crafting an organizational structure that is a eutopic blend of the flatness necessary to grant their teams freedom and empowerment to make decisions, and the structure necessary to keep their Millennials feeling supported and motivated. It’s a tightrope walk my friends, but entirely possible. Good luck out there.