An Alternative View on Company Structures

For years my thinking about company structures went like this: “The more structure a company has, the more it sucks.” So I was arguing against putting new structures in place, whenever I heard of such ideas. Of course I knew, that no company could exist without any sort of structures. So my credo was: Let‘s only have structures, where it is absolutely necessary. And in my mind it only became necessary when we were growing and the new size made it necessary to come up with new structures, because otherwise things break down..

Potential downsides of rigid org structures are well known: Less freedom for the workforce, and hence less engagement and less innovation; Dilbertesque policies that might make sense for some part of the organization but not for the rest of it; single points of failure due to hierarchical pyramid structures etc.

Back to my credo: “Let‘s only have structures, where it is absolutely necessary”. I still think it‘s valid, but here comes the catch: I‘ve realized that there are other things than sheer growth in headcount that can make it necessary to add more structure! Here are three things I think are worth taking into consideration: Diversity, Fairness and Health.

Diversity

There‘s plenty of research (see this article for more resources) that shows how more diverse groups make better decisions. When people think about diversity, they mostly think about gender. While gender is very important and there is a lot to improve, especially in the tech industry, we should also think of diversity in terms of age, race, cultural and economic background, sexual orientation, political preferences, family situation, etc.

When I talk about diversity with my colleagues, we very often end up with the idea that we should have more structures. There are two reasons for this:

1. If we want to have a more diverse workforce, we have to change the way we recruit and hire people. For a long time the way I did job interviews went something like: Let‘s have a coffee together and afterwards we do a thumb vote if we want to work with this person or not. If you use a process like this, you can be 100% sure, that your decision is affected by all sorts of cognitive biases and that you are biased against diversity. Like one of my colleagues put it nicely: “Having more diversity in a group feels like a grain of sand in the gear.” It feels uncomfortable. Humans are hard-wired to prefer being with people who are like them. And this is exactly what we want to avoid when we talk about diversity. One countermeasure for this are structured job interviews. Google does this rigidly, as Lazlo Bock (Head of People Operations at Google) presents in his book and this article. What are structures interviews? Not only are the questions for a job  interview formulated beforehand, but there‘s also a definition of the types of answers that are considered to be good/mediocre/bad. Or, as Bock puts it, a structured interview is “a consistent set of questions with clear criteria to assess the quality of responses”. And Google even goes one step further: The hiring decision is not made by the people, who did the interview, but by an separated committee. Sounds like a lot of structure, right? It certainly does to me and I was terrified, when I heard this for the first time. But if we take diversity and de-biasing seriously, this might be the (or at least one) way out.
2. As soon as we become more diverse in our workforce, we might also need more structure. My colleague Boris just shared his thoughts on this with me: “If we were all clones of each other, we wouldn‘t need any structures. Everyone knew exactly what the others think, how things work and what the next steps are. But this would be zero diversity. If we have people with different backgrounds, we need more explicit structures, otherwise people get lost.” This totally makes sense to me. If all your employees are 30-year old, left-winged white male surfer dudes without kids, you probably don‘t need much structure, because their thinking might be very aligned. And if they face a problem, they will find a way to work around it easily, because every evening they‘re drinking beer together. So this scenario is very comfortable, and although it‘s intentionally exaggerated, I think a lot of start-ups work in a similar way. It might be okay, or even necessary for a small company to operate in such a way, but if the company is growing, and especially if it‘s critical to improve the quality of decisions, increasing diversity becomes very important. And that increased diversity comes with the need for more structures.

Fairness
Every organization has implicit and explicit structures. And probably it‘s a good heuristic to say that the less explicit structures you have, the more important the implicit structures become. That can be considered unfair, because it favours those who are good in navigating through blurry structures. Often the best (or even the only) way to get things done in such a context might be having good personal relationships with the most influential people in the company. For new people it can be really hard to join this game, because the rules are...implicit. And it gets even worse, as soon as you get more diversity. Imagine that, for the first time, a single mother joins the company. She probably does not have the time nor the interest to hang out every other evening with her colleagues.

In this classic feminist article from the 1970s, Jo Freeman argues that so-called structure-less groups are undemocratic, because they tend to be dominated by elites, who are not accountable to the larger group: “For everyone to have the opportunity to be involved in a given group and to participate in its activities the structure must be explicit, not implicit.”

I am not very familiar with the feminist movement, and the groups Freeman talks about are political groups, not companies. Still the argument makes a lot of sense to me and made me think.

Health

While organizations with little (explicit) structure provide a lot of opportunities, they also might make it easy for people to jeopardize their health. The reason for both, the good and the bad aspect of little structures, is what I would call “anything goes”. If responsibilities, decision-making-mechanisms, team structures, career paths etc. are unclear, the organization might be able to exploit the advantages of fast decision-making (“if it‘s not clear, who makes this decision, let‘s just decide in this group - right now”) and fluid teams (“let‘s team up and build this thing”). On the other hand, the same context might encourage people to work in an unhealthy way. By this I not only mean the sheer amount of hours they work, but also the effect of over-commitment and mental overload. Because it‘s unclear, where my responsibility ends and what the company expects from me, I might take on everything I find interesting or important. Of course I can only do so many things, but I am very ambitious, and nobody stops me from starting all these exciting things. So maybe I should start working a little bit longer every day and think about all the interesting problems at the weekends and during my holidays?

What now?

I think it‘s important to realize that structures in itself are neither good nor bad. And I am not making the case for excessive structures. Like with many things, it‘s a permanent trade-off decision we have to make. Instead of falling in the trap of binary thinking (“all structures are good/bad”) we should think about the pros and cons of adding more structure and then find a healthy balance for our context. My impression is that in the Agile/Lean community we have very much focused on the downsides of structures in the past. Maybe it‘s time now to take the upsides into consideration a little bit more.

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Like this post? Then you should check out my previous post Radical Transparency? and one of my newer posts Seriously, what is a Pull System?