BREAKING OUT OF THE PYRAMID
Getting the most from your workforce
By Professor Robert Hooijberg. (June, 2007)
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BREAKING OUT OF THE PYRAMID | Getting the most from your workforce
To remain successful, modern organizations need to tap into the knowledge and skills of
their people. However, the traditional pyramidal management structure – which is still
alive and well in many companies today – can hinder rather than facilitate this. New
approaches are needed that foster alignment, insight, cooperation, and initiative among an
organization’s entire workforce. In a chapter from the recently published book “Being
there even when you are not: Leading through strategy structure, and systems,” Robert
Hooijberg and Paul V. Broeckx talk about getting the most from your workforce:
Limitations of a pyramidal structure
- Pyramidal structures were originally designed to manage poorly educated; illinformed people who needed supervisors to tell them what to do and how to do it. But
these days, high levels of education and access to information mean that such
structures often negatively affect people’s behavior and motivation – and
consequently organizational performance. The worst limitations of the traditional
pyramidal structure are:
- Vertical career progression – Tending to be the only model for professional
development, climbing the hierarchical ladder frequently becomes a system in itself.
People may choose a particular career path simply to enter top-level management,
even if it does not match their profile or skill set.
- Command communication – A top-down command mode, where orders are swiftly
executed without being questioned, has long been accepted as the most efficient way
to produce results. But by not discussing the expected results, alignment is achieved
between the superior’s expectations and the action instead of between the action and
the expected results. This communication style also assumes that people at lower
ranks cannot contribute to strategies and objectives.
- Company experience – While experience is obviously valuable, length of experience
and seniority have often been confused. The cost of promoting people into leadership
roles mainly because they have been with the company for years has become
unaffordable today. In addition, these days experience (like knowledge) can rapidly
become obsolete and a killer of creativity and initiative.
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BREAKING OUT OF THE PYRAMID | Getting the most from your workforce
- Internal competition – The traditional managerial principle puts employees in a
competing mode, which can restrict and even discourage knowledge sharing and
cooperation. This can be costly with a well-educated, informed workforce: by not
bringing together its people’s knowledge and insight, the company misses out on
efficiency and result orientation.
- Silo thinking – The traditional managerial role of centralizing information and being
the sole point of communication between the team and top management is still
embedded in the mentality of many managers today. This, together with reporting
lines to one superior and the tendency of internal competition to create strong
“allegiance” to the superior, automatically creates silos.
- Obedience orientation –With the quality of task execution defined by the superior, it is
more important to be obedient and conform to the superior’s expectations than to
display initiative and concentrate on results. These days it is a sheer waste not to
raise the level of initiative and optimize all the skills and insights available in a welleducated workforce.
- Delegation of tasks rather than authority and responsibility – Traditionally, the
manager retains decision-making authority and is often the “correcting” manager as
well as the only judge of performance quality. But in trying to maintain their
superiority, most managers tend to stifle others’ self-confidence, leading to lower
motivation and efficiency.
Building on human potential
These limitations block four key factors that modern organizations need from their people
in order to take full advantage of their knowledge and skills – and thus ensure long-term
profitability and sustainable company development. These are:
- Alignment – a clear sense of the expected results and company values, with everyone
convinced and engaged
- Insight – the process of transforming experience into action
- Cooperation – the genuine sharing of insights and knowledge
- Initiative – improved efficiency through motivated, self-confident employees
When these four factors come together, silos and the silo mentality disappear. This alone
is worth the effort and will unlock additional efficiency and effectiveness. There is also
improved alignment with results – exactly what companies wish to achieve.
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BREAKING OUT OF THE PYRAMID | Getting the most from your workforce
New management structures needed
The question is: how can companies break out of the pyramid structure and achieve
alignment, insight, cooperation, and initiative? We believe the answer is through flatter,
more flexible structures where managers are more like “hubs” that connect people and
combine skills, managing through a network rather than a traditional hierarchy. Highquality processes are needed for decision making and debate, as are new ways of
assessing people to give priority to insight over experience. Barriers to cooperation must
be eliminated, and working climates must foster self-confidence and provide breathing
space to encourage initiative.
Nestlé: benefiting from a new approach
Nestlé’s recent evolution from a pyramidal structure to a network organization provides
proof of the value of implementing such an approach. The company achieved this through
its “Nestlé on the Move” program, which has five major parts:
-
Implementing flat and flexible structures – An in-depth examination of corporate
structure and functions was undertaken, and the number of hierarchical levels was
reduced.
-
Inspiring management – Programs were implemented to improve the leadership
skills of managers, starting at the top level, as well as to reverse their role from
“passive judge” to “committed developer”, and so make them responsible for the
development of their people.
-
Long-term development – With fewer hierarchical levels, fewer promotion levels are
now available. Interregional and interfunctional moves were therefore enhanced to
stimulate both personal development and organizational learning, and new roles
were created that cut across traditional career paths. A talent pool was also
developed in line with the company’s development needs.
-
Dynamic compensation – Also in response to the flattened structure, horizontal
remuneration models were developed that allowed increased remuneration even
without promotion.
-
Lifelong learning – Nestlé has always held a strong belief in the need for continuous
learning, both through internal and external programs.
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BREAKING OUT OF THE PYRAMID | Getting the most from your workforce
“Nestlé on the Move” has made an important contribution to company results in terms of
drive and excitement. Leadership skills have demonstrably improved, and the new
compensation model has improved the company’s competitiveness at all levels. Nestlé
provides a clear example of how a company should manage an emancipated workforce,
and demonstrates – in a concrete manner – that people are the most important asset.
Professor Robert Hooijberg teaches on the Managing Corporate Resources (MCR) and the
Orchestrating Winning Performance (OWP) programs as well as the Program for Executive
Development (PED). He is co-author of the book “Being there even when you are not:
Leading through strategy structure, and systems.”
Paul Broeckx is director of Nestlé's Corporate Human Resources Division.
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BREAKING OUT OF THE PYRAMID | Getting the most from your workforce
RELATED PROGRAMS
MANAGING CORPORATE RESOURCES - http://www.imd.ch/mcr
Drive your business unit, build your management excellence
Program Director Thomas W. Malnight
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Assess your business challenges, design an integrative response and
prepare to implement
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Boost performance at your own individual and business-unit levels
PROGRAM FOR EXECUTIVE DEVELOPMENT - http://www.imd.ch/ped
Building Global Leaders
Program Directors Martha Maznevski and Allen Morisson
IMD - www.imd.ch
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Learn to drive performance in a fast-changing global environment
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Discover how to build a better business: gain skills, create networks and
inspire others
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Reach your leadership objectives with personal coaching
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Get ready for IMD's Executive MBA degree
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