July 29, 2006

Spider-web Reporting Structure

Posted by Bizaholic | 9:10 PM | , with 5 comments »

The reporting structure of an organization has a direct bearing on the productivity and effectiveness of its employees as well as the entire system. Any design flaw on this front is not only expensive but also detrimental to the health of the organization. The reporting structure is fundamentally a network within an organization, very much like the network of veins and arteries in our body. This network within an organization has a task to ensure sustained flow of "organizational oxygen" carrying blood – information, accountability, and authority. Extreme care has to be taken to determine the points where they merge, points from where they emerge, and the direction in which they flow. Like any high performance network, this organizational network has to be optimized for superb performance with laser sharp precision.

But how many organizations understand the value of their reporting structure? And how many of those who understand the value of their reporting structure go out of their way to make sure that their network is optimized? I think very few of them. While it is fairly common to hear high sounding rant of top level managers and leaders about organizational re-design and need for flat structures, in reality something else is practiced.

Serendipitously, with some good luck, or perhaps bad luck, I have discovered the worst kind of reporting structure that I will call “Spider-web reporting structure”. In this “Spider-web reporting structure”, organization has a network in practice that resembles a typical spider’s web, even though in policy documents it might be engraved that “the organization understands the need for a flatter organization to increase effectiveness and ensure better internal communication, and continuously strives to reduce the number of layers in the corporate hierarchy”.

Given below are some of the typical features of a Spider-web reporting structure:
  1. Even though in organization’s manual, it is clearly defined who reports to whom, in practice, instead of following the standard reporting structure immediate bosses and super bosses are frequently bypassed and find to their surprise that they are not in loop on many affairs of organization for which they are accountable.
  2. There is a strong power center, sometimes two power centers, who controls (or tries to control) the entire affairs of the organization including minutest and the most trivial of things. And this power center(s) even dictates the appraisal of people who are 5 levels below them. So you can expect a VP to write the appraisal of an officer! (Well, don’t think this is a figment of my diabolic imagination. I have seen this with my naked eyes.)
  3. Utter chaos prevails. No body understands what authority he has and over whom.
  4. Accountability is well defined for each employee even though they have very little authority and all the small guys are accountable for decisions taken by the power center(s) on their behalf and without their consent.
  5. Sycophancy is rampant and unless someone is in the good books of the power center(s) he cannot expect to rise in the organization, irrespective of whether his immediate boss likes him or not, and whether he is an over-performer or an under-performer. Performance in these kinds of organizations is basically the perception of performance the power center(s) has based on his mental compatibility with the particular employee.
To sum up, in the Spider-web reporting structure, the spider(s) rules and all information converge to him without following a well defined path. Authority is a centralized feature and flows from him. He is quite stingy as far as delegation of authority is concerned. He decides how much authority flows to someone on his web. He can choke information as well as authority at any point of time at any place depending on his whims and fancy. Though he is accountable for the results, he generously delegates accountability throughout his web. If he doesn’t like someone, he can even kill or permanently disable that person on his web by pulling in the right strings from the center.

Practice of Spider-web reporting structure over a considerable length of time results in the following maladies:
  1. High performance is overlooked resulting in steep decline in motivation of talented and performing employees.
  2. Average performers with a place in the good books of the spider(s) enjoy themselves without bothering much for performance and get well fed and well paid.
  3. Attrition of talent is high.
  4. Organization performs at quarter of its potential. The organizational atmosphere stinks of inefficiency. Productivity takes a back seat and laid back attitude prevails.
  5. A palpable divide is observed between talented though overlooked employees and average but pampered employees.
Huh! Utter waste of money, talent, and resources.

July 23, 2006

“Vision” is perhaps the most abused and beaten word in corporate world. Every organization has a grand vision and the irony is that hardly anyone in the organization understands what the vision is. Except a few exceptional cases, the vision of an organization is more like a designer necklace meant for display and the “wow” effect rather than for internalization. And this is the problem.

The root cause of this problem is lack of continuous communication. Things like vision are such that initial euphoria dies down soon if a system is not in place to reinforce it continuously. Sooner rather than later, employees forget all about vision and get back to their routine of worrying about their deadlines and meetings. Majority of employees, particularly at the lower and middle level, blissfully become unaware of their organization’s vision, the very thing that is supposed to guide their day to day conduct. So every desk prominently displays the organization’s vision that no body cares to read, understand, or emulate. The result is the dilution of the very purpose of the having a vision i.e. having a shared purpose and idea of focusing on the future.

At the same time, in the same corporate world, there are leaders who understand the value and importance of vision and take upon themselves to ensure that each and every employees of their organization understands, internalizes, and practices the vision of the organization. And they do not delegate this responsibility of communicating the vision to all employees. They take this responsibility of communicating the vision upon them and ensure that the entire organization is crystal clear on what the vision of the organization is and what role he has to play to realize that vision. They personally ensure that there is no scope of ambiguity on this front.

Legendary Jack Welch is said to have personally driven the communication of his vision to such an extent that had he called his managers at 3 o’clock in morning and asked them what the vision of GE was, they would have blurted the vision of GE verbatim in half sleep. That’s called communicating the vision so that everyone in the organization virtually eats, drinks, breaths, sleeps, and lives on vision.

What about your organization’s vision? Just randomly ask some of your employees to get an honest answer.

July 22, 2006

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

- Bill Gates
Having seen the chaos created by application of technology to automate an inefficient operation, I can’t agree more with Mr. Gates.

It’s always better to make the operations efficient before investing in technology to enhance efficiency and effectiveness. Otherwise, technology if applied to the inefficient operation will lead to the proverbial “coconut in a monkey’s hand” kind of situation. The monkey cannot break open the hard outer cover of the coconut (well, he has no clue about how to break it open) and without that he cannot eat the tender and delicious fruit inside. And who knows, the monkey, in frustration by his inability to break open the outer shell and taste the inner fruit, may indulge in destructive activities like throwing the hard coconut at someone’s head and hurting him.

July 15, 2006

In its July 16, 2006 issue, Business Today published its annual joke, the B-School ranking in India.

Seeing the ranking and reading the cover story outraged me so much that after reaching home the first thing I did was to mail a letter to editor of Business Today expressing by angst and displeasure at seeing the ranking. Well, I never expected Business Today to publish my letter as the words were really harsh. But now having confirmed in the latest issue that my letter on the said subject has not been published, I think it should be put on my blog for my esteemed readers. Here it is reproduced:

Dear Mr. Editor

Apropos the B-School ranking published in 16th July'06 issue. To put it very mildly, I am outraged after going through the rankings.

The first three positions seem fair enough but the story turns topsy-turvy there after. To see the name of Symbiosis ahead of three other IIMs, XLRI, FMS, SPJIMR, JBIMS, etc. is incomprehensible. But the most shocking bit is finding worst grade B-schools like IIPM Delhi at 11 th rank and IIPM Mumbai at 16th rank – way ahead of better known B-schools like IIM Khozikode, IMT Ghaziabad, MDI Gurgaon, NMIMS, XIM etc. And this is not the end. There are many Tom, Dick, & Harry type B-schools in your top 30 at fairly higher ranks at the expense of really good B-schools.

To anyone with even a vague idea of Indian B-school scene, this entire ranking seems hilarious. I don't understand why business magazines like yours put up a sorry figure year after year after release of these absurd rankings. I can fathom only two reasons for this absurd ranking – either your research team is incompetent and cannot put a decent research methodology, or perhaps you derive rankings even before doing your research!

Well, I would like to let you know one more thing. Every time you guys publish something as absurd as this current ranking, you lose a little bit of respect from readers like me who view (or perhaps viewed) your publication highly. We expect thorough professionalism from Business Today.

Secondly, please be responsible towards aspiring MBAs, many of whom rely on rankings published in magazines like yours to decide their career as well as future. Please practice responsible journalism.

Mayank Krishna

What is the use of this kind of ranking that seems so biased and without any objective methodology? Not only it is bad in taste, it is misleading as well and might become responsible for spoiling many a promising career.

No surprises that Prof. Madhukar Shukla, faculty at XLRI, has given “F” grade to Business Today’s B-School ranking.

July 13, 2006

Nuggets of Management Wisdom #3

Posted by Bizaholic | 10:34 PM | with 1 comments »

Perception is reality even though it may not be reality.

This is one of the biggest paradoxes of life that I know. It will not be an exaggeration to say that our lives revolve around perceptions.

Perception is not an illusion. It is a mirror where people see what they want to see. It is as real as the reality itself.

Focusing on managing the perceptions of people around us might be the key to success in life and career.

July 9, 2006

World Bank says that India is now the 12th wealthiest nation with a GDP of $785.47 billion or Rs 35,34,615 crore in 2005.

Contrast this news with the fact that nearly 380 million Indians live on less than a dollar a day! Huh, we are the 12th wealthiest nation and yet one-third of the Indians live on less than a dollar a day or an annual salary of less than $365!

A few days back, Pankaj Mishra wrote an insightful article for The New York Times entitled “The Myth of New India” (an edited version is available in today’s print edition of Hindustan Times).

Well, perhaps we are facing the biggest paradox of economic growth. On one hand, almost every one is talking about India being the next USA and 21st century being the century of India; on the other hand we have, perhaps, the biggest mass of poverty stricken population on the earth. On one side, our stock markets are shooting past stratosphere creating billions of investor wealth; on the other side, we have 2.5 million children dying every year of malnutrition and debt stricken farmers committing suicide (more than 100,000 farmers in India have committed suicide since 1993).

Is there something wrong with our developmental agenda? Perhaps, yes. Our current model of growth may not be able to bring a change for the better in the lives of majority of our people. With the current agenda, we can only help accumulation of private wealth in the hands of a select few to the detriment of the huge majority. At most we can have is a trickle down of wealth to the masses, not sufficient enough for bringing about the desired change. But the biggest gainers will be a select few whose wealth will grow exponentially while the income of common man will move on at arithmetic progression. Secondly, the current paradigm of growth cannot be sustained, at least in Indian context, with a billion stomachs to feed and limited natural/ manmade resources which are getting depleted faster than replenishment thanks to reckless consumption pattern of a small well to do minority.

So what’s the solution, or is there one at all? As far as my intellectual and thinking horizon permits, there is a solution, though quite radical. No, it is not about coming back to socialism or embracing communism. The solution perhaps lies in getting socialism married with capitalism! It is neither about corporate citizenship nor it is about social responsibility of business; it is about making society an equal business partner. It is about development of society hand-in-hand with the development of a business. The essence is to bring society on the platform of capitalism for betterment of the overall living standards of the society at large and at the same time get an access to a huge market, big enough to create capitalist behemoths, profit from it, and plough back a just proportion of the profit back to the development of society. If this kind of cycle can be created and maintained, then sustainable, win-win development for one and all will turn into a reality.

Perhaps the time has come to teach capitalism with a comprehensive course on sociology.

I will write more on this subject in coming days. Stay tuned in.

July 8, 2006

Writing Wisdom

Posted by Bizaholic | 5:24 PM | with 0 comments »

“A writer needs three things, experience, observation and imagination, any two of which, at times one of which, can supply the lack of the others.”

- William Faulkner, Nobel Prize winning novelist

July 6, 2006

Today I have come to realize that it is not the quality of your work that matters but how you present it to people who matter. As a rule, in life nothing is perfect or ideal. At best, anything can be close to ideal. So if you do something that has 90% perfection and 10% imperfection, then people will focus on 10% imperfection rather than 90% perfection if you don't know the exotic art of presenting yourself and your work. But someone with perfection to imperfection ratio of 70:30 and having the gift of shrewd presentation can make his superiors focus entirely on the 70% perfection without even letting anyone know about his imperfections. Not only this, people gifted in the art of presentation of their work are equally gifted to make their superiors focus on the imperfection part of their competitors and distracting them from their competitor's areas of perfection.

Of course, the effectiveness of this beautiful art is also dependent on the quality of superiors and their talent to ask probing and discerning questions from their subordinates. But despite this, in general, people gifted with art of presenting themselves and their work shine and enhance their power and influence. No doubt that they are foxy creatures. But who cares? Nobody except the victims of this unique creature.

July 3, 2006

Nuggets of Management Wisdom #2

Posted by Bizaholic | 11:49 PM | with 1 comments »

Over a period of time, individual effectiveness and productivity of employees tend to move towards the organizational average.

Corollary: Hiring intelligent, productive, and effective people raises the average effectiveness, productivity, and intelligence of organization while hiring mediocrity lowers the organizational average.

It has been long established that environment and surroundings mould attitude and behaviour of people. This is equally true in context of organizations. A vibrant organizational atmosphere inhabited by talented and effective employees raises the performance level of the least talented employees. On the other hand, an organizational atmosphere inhabited by predominantly mediocre people is bound to diminish the productivity, effectiveness as well as efficiency of the most talented employees.

So at individual level, keep an eye on the company you keep, and at organizational level, hire prudently.

July 2, 2006

Peter Drucker Speaks

Posted by Bizaholic | 12:07 AM | with 0 comments »

"No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under leadership composed of average human beings."

- Peter Drucker

July 1, 2006

Nuggets of Management Wisdom #1

Posted by Bizaholic | 10:09 PM | with 1 comments »

Corporate world has a selective memory. Individual success is soon forgotten while collective success lingers. Collective failures are soon forgotten while individual failures are part of elephantine memory.

Of course this is a generalized observation with some exceptions. There are a few enlightened organizations which have built culture of high risk taking, innovation, and viewing failures as stepping stone to success. In these organizations people are not judged by their success or failure but by their contribution to a greater cause.

Still it would be worthwhile to keep this management wisdom in mind while charting the rough waters of a corporate career.