Hacking HR to Build an Adaptability Advantage
In our experience, most executives overweight the advantages of scale and underweight the advantages of flexibility, and this fuels the enduring managerial preference for combining small units into big ones.
Big things aren’t nimble. This is why Gore & Associates, the manufacturer of Gore-Tex and 1,000 other high-tech products, limits its business units to around 200 individuals. It’s why Morning Star, the world’s largest and most efficient tomato processor, has more than twenty business units in a company with only 500 full-time employees. And it’s why Google’s average team size is 4-7 individuals.
In a company comprised of a few, very large organizational units, there is often a lack of intellectual diversity—since people within the same unit tend to share the same underlying business assumptions. Big units also tend to have more management layers, which means new ideas have a longer gauntlet to run. In addition, elephantine organizations tend to undermine personal accountability. An employee who’s one of thousands, rather than one of a few, is unlikely to feel a personal sense of responsibility for helping the organization to adapt and change (surely, that’s someone else’s job!).
One practical challenge that I've noticed with respect to redesigning existing structures - if we want more flatter organizational hierarchies, it seems that the team sizes tend to grow as we collapse the existing structure and reduce the levels in an organization. Couple of questions in my mind:
- How could we maintain smaller focused teams and flatter organizations, in parallel?
- Also, if there are multiple smaller teams, would their efforts need to be integrated efficiently at some level for overall effective delivery?
Totally agree with the thinking that large organizational units are not very effective or engaging...
The larger the system, the harder it is to adapt! I tend to agree having been in an organization that spent 5 years integrating a sales system only to realize that cost efficiencies had accrued at a very high price - competitiveness in the market! Smaller sales organizations, with nimble structures and smaller teams were winning precious market share. The next 5 years were then spent undoing the integration!
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