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"No organisation ever financed anything that it did not get control of. You
cannot separate responsibility and power. If an organisation hands out a
dollar, with it goes the implied responsibility of how it shall be spent and
some influence on the life of the recipient." It shouldn't have and couldn't have happened. But it did. How? Barings found out too late that maintaining the right balance of different philosophies and cultures is the key to organisational management. In the bank's Singapore office, trust and instinct ruled uncontested. But management controls were totally absent. The result was disastrous: a spectacular example of why no manager can afford to ignore the philosophies of management. "Philosophy" is a word bandied around like confetti at a wedding when associated with the words "management" or "business". It implies wise solutions to every problem after calm appraisal of the current situation. However, at the coal face it takes on a different de facto meaning. Organisations of all types, even business organisations, are typically bureaucratic. The key feature of a bureaucracy is top-down management control. And despite all the talk of flattening hierarchical corporate structures, organisations are in one sense under pressure to become even more bureaucratic. A business, like any other organisation, tries to grow and become bigger, because the bigger it gets the less dependent it is and, in theory, the more flexible it becomes. For example, in a sprawling conglomerate, a loss sustained in one area can be offset by profits in another. Consider the huge South African monolith, Anglo American. Its gold division, Anglo American Gold (Amgold), performed badly during the first six months of 1996/1997 financial year. Net earnings dropped from R264-million to R229-million. Against the background of the plummeting rand value - it plummeted by more than 30% during the period under review - qualified observers said Amgold's profit should have soared by as much as 70%. But it didn't. However, a vigorous performance by the coal division, Amcoal, saved Anglo's bacon when it raised its per share earnings from 1 283,6 cents 1 680,4 cents. The performance by Anglo American Industrial (Amic) also helped wipe the egg off Anglo's corporate face. The business environment has never been more volatile. Change is rapid and constant. To survive, flexibility is a must. But building bureaucratic structures isn't always the answer. Indeed, it seldom is. Bureaucracies that suffer from the make-copies-in-triplicate syndrome, such as those so beloved by governments, are invariably staffed by more over-paid chiefs than Indians. Here's an example: A report, focusing on a government department in the UK, noted that 24 supervisors oversaw the work of 25 clerks. When this was brought to the attention of a certain Civil Service head, he was horrified. "Imagine such a situation!" he said. "Which supervisor was absent?" Then there's the story I heard in Pretoria, South Africa's bureaucratic jungle. Although I can't swear to its veracity, it appears that an assistant department head was instructed to reduce the amount of storage space occupied by redundant files.. So he told his secretary to get rid of them. "But," he warned her, "see that you make a photocopy of every piece of paper before you destroy it." Working without deviating from a rigid formula is the hallmark of every bureaucratic structure. In the context of business today, for example, information technology dictates that all departments use the same forms and language. Government regulations and accepted methods of bargaining with trade unions also result in internal consistency across the organisation. The larger your business grows, the more controls, rules and procedures you'll be tempted to implement. Controls, rules and procedures demand consistency. And consistency implies standardised method, fixed reporting methods and so forth. "Consistency," as Oscar Wilde observed, "is the last refuge of the unimaginative." The more you expand your business and the more consistency you insist on, the more bureaucratic your business becomes and the more tightly defined its internal boundaries.
Today, the people who work for you want more from their jobs than just a wage packet or pay cheque. They want you to recognise them as thinking assets, not mere machines. If you're a keen student of the latest developments in the science of human resources, you'll know about the value of fulfilling your employees' desires in terms of increased motivation and productivity. That's why, if you're wise, you've jettisoned management command-and-control philosophies in favour of employee empowerment and participation programmes. You've replaced the management versus labour hierarchies of bureaucracy with independence and problem-solving teamwork. In summary, the forces of modern business are pulling you in two opposite directions: to be at once more and less bureaucratic. As a business owner or senior executive, you're involved in a tug-of-war between the laissez-faire style of management and the bureaucratic approach. Let's face it, despite what management gurus preach about the benefits of flat, business structures without borders, there will never be an organisation that is completely without boundaries. Because people employed by a business or any other organisation have different levels of authority and influence, there will always be hierarchical, or vertical boundaries, to distinguish them from the rest. And because people specialise in different tasks, there will always be boundaries between functions - horizontal boundaries. Other boundaries you'll encounter are external - boundaries that separate the work you do from the work done by your suppliers, customers and other outside companies, geographic - boundaries that separate work done in different places, different time zones and, sometimes, by different cultures. You can't eliminate these boundaries. But you can make them permeable so that they allow information, ideas, resources and energy to flow freely throughout your company. Relegate the thick, unyielding walls of the past to the rubbish heaps of corporate history. If you don't encourage fluidity in your company, it could lose its competitive edge. The reason? Factors for success in business have shifted from:
. The vertical, horizontal, external and geographic boundaries of traditional organisations constrain the new success factors of speed, flexibility, integration and innovation. Follow my three guidelines:
Think of the structure of your company. If you're like most of us, first and foremost you think vertically ... you think pyramidal. The chief executive officer (CEO) occupies a place of honour at the top. Below we find the middle managers, with the workers and administration even lower down in the corporate pecking order.
Now read a definition of teamwork by American businessman and political leader Russell Baker: "A team is a mutual protection society formed to guarantee that no one person can be held to blame for a botched committee job that one person could have performed satisfactorily." Ignore the self-appointed management gurus and Mr Baker. Hierarchies are basic to human social interaction from family to religion to school to work to government. Therefore they will and must continue to exist. Without hierarchies, human groupings of any kind would fall into inefficient anarchy. So what can you do about your company's inefficient and outmoded hierarchical structure? Make it healthy. This means you have to enhance your organisation's speed, flexibility, task integration and ability to innovate. You won't do this by clinging to the factors that ensured success in the past. If, in your quest for continued corporate prosperity, you adhere to old-fashioned recipes of size, role, clarity, specialisation and control, you'll experience:
Not entirely convinced? Check out what happened to Xerox back in 1973. In that year the company's Research Centre in Palo Alto developed the world's first personal computer. That was three years before Apple put its first product on the market. However, Xerox research boffins were unable to sell their idea up the chain of command. Those at the pinnacle of the corporate pyramid myopically recognised only developments related to photocopier technology. In essence, vertical boundaries stopped Xerox from reaping the rewards of being first in a field that was to take the world by storm. To make the boundaries in your organisation more porous, set each of your employees the task of redefining his or her role in producing a result. I often ask people what they do. The replies are pretty standard. "I'm a doctor," she proclaims, wearing the obligatory bade of office: a stethoscope and white housecoat. "I'm a chartered accountant, " he says with all the enthusiasm of a dried tomato. What piffle! That's not what they do. That what they qualified as at university.. Doctors try to make sick people better - that's what they do. An accountant counts numbers, and sales reps makes sales. That' s what they do. Forget about titles. Work on results. Replace the titles on everyone's business cards with a description of what each individual does in customers' terms. Change from descriptive titles to prescriptive statements. And don't stop there. Make everyone in your organisation responsible for producing a measurable result, whether he's the officer cleaner who has undertaken to keep the premises clean or the managing director who's responsible for producing long term profits. The way to go: get each person to define their result. Then ask them to write down exactly what functions they should perform to produce that result. If you follow this route, chances are that you'll need to ... Many organisations in the public and private sectors attempt to pry loose hierarchies with powerful-looking, impressive-sounding change programmes. And they're often disappointed when results come nowhere near matching expectations. Back in the early AD's, Roman satirist Petronius noted: "We trained hard. But every time we were beginning to form up into teams, we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising - and a wonderful method it can be for creating an illusion of progress while producing inefficiency and demoralisation." The more things appear to change, the more they seem to stay the same. The crux of the problem: implementing change without first creating a systematic framework for the change.
Here are four guidelines that will help your design the framework you need:
There is a fifth factor you shouldn't overlook in your rewiring operation: the corporate rule book. Even if you don't have a formal tome of do's and don'ts like some of the huge conglomerates, I'm willing to bet that have a web of rules and procedures that govern your modus operandi: dress codes, time sheets, authorisation checks - things like that. Write them down. All of them that regulate actions in your company right now. Ask your staff to help you. It doesn't matter how absurd they are. Just write them down. Then get hold of a big bag, fat red marker pen and put lines trough any rules or procedures that are not directly linked to producing the required results. You still haven't finished rewiring. Your next move: get every member of the staff to write down - step by step - the functions they must perform to get their results. This servers two purposes:
Okay, so you've decided to rewire your corporate system. What do you do now? The four dimensions outlined below are vital if you want to kick-start your business into new-found prosperity. In traditionally rigid hierarchies, management hoards information, releasing it only on a need-to-know basis. To overcome the problem, encourage the free flow of data. Sharing information throughout the company will enhance the business's response speed and encourage innovation. It's usually pretty easy to share good news. But don't keep the bad news to yourself., either. If members of your workforce know the difficulties you're facing, they'll react more sympathetically to your proposals, even though they may be tinged with bitterness. And when you communicate, which should be often, develop the ability to use simple catch phrases that focus the message without hiding the complexity of the task or tasks behind it.
A company structured along inflexible, hierarchical lines splits skills along different levels. In the characteristic pyramid formation, leadership skills are concentrated at the top while technical skills sink to the bottom. Healthy hierarchies are different. They allow competencies to develop wherever they're needed, without regard to rank, position or status. To slice through the bureaucratic red tape generated by pyramidal hierarchies, determine the technical and cultural competencies required by employees at every level of the business. Then fill the competence gaps through training or by hiring qualified people. For example, you can enhance the speed of response to customer requests simply by training salespeople to do their own credit checks. The process doesn't require the cerebral capacity of a rocket scientist. In the nanosecond 90's, speed is of essence. Look at each employee's self-stated result and determine how long the functions take to produce it. Then insist that the length of time be halved within four weeks. It can be done. Sure, you may have to update and upgrade your existing systems. Decide on which systems produce the results you desire and keep them. Dump the other systems or replace them with ones that keep your results up to speed.
Urge competent members of your workforce to constantly challenge established decision-making assumptions. In which book is it inscribed that factory workers can't stop assembly lines to meet customers' specific needs? And what legislation forbids retail workers from making special arrangements without management approval to keep customers happy? Even if the die-hards in your boardroom proclaim it a heresy, insist that more decisions are made by the lower echelons - at the rock face, so to speak. But be prepared. It's going to rock the boat and lead to far-reaching changes, particularly in middle management. Direct supervision will become less important than guidance and motivation. Make each person in your organisation an entrepreneur by asking them: "If you were freelancing, how would you do your job differently?" Calculate exactly how much each person costs the company in terms of wages and salaries, office or factory rental, medical aid, pension, stationery, telephones, etc. Then ask them to calculate the profit on their jobs. A minimum of three times cost is an acceptable norm. For example, if a secretary cost you R10 000 a month in total - including 13th cheque, office space, salary, etc - she should be providing you with the value worth R30 000 a month. In other words, if you sub-contracted the services she provides, your bill would be 30 grand a month. Employees are often rewarded more for their position on the hierarchical ladder than for their performance. If this is the system you have adopted, you're in essence rewarding people for their past achievements - achievements that got them promoted to their current positions. To get the best out of the people you employ, revamp your company's reward system. Reward performance and skill, not position. One way of accomplishing this is performance-based pay. The better they do, the more they get. You can also spread rewards across vertical boundaries through such things as employee stock option plans. With these in their pockets members of your workforce will feel they have a greater stake in how the company performs. I spoke to a worker at a factory in Wadeville. He'd taken the opportunity of taking up a stock option offered to him by his employers in recognition of a job well done. "Now," he said, "I have to worry about the lousy work I'm turning out." And to keep motivation on the constant boil don't just reward individuals. Offer rewards across functions by giving teams who do well a share of the spoils.
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young man working in an overseas subsidiary office brought down one of the
oldest, most venerable investment banks in the world. Nicholas Leeson, a
futures trader in Barings Plc's Singapore office, ran up losses of
$1.3-billion on Asian markets. The debt forced the bank, which had traded
for 233 years, into bankruptcy. 
