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.


  1. Better Tomorrow For India // July 30, 2006 at 8:34 AM  

    Indeed a very good analysis. It appears to be so universal that it accurately depicts the situation even in Government Departments. Let us hope that with the change in circumstances owing to growth and increased competition things will change for the better in future.

  2. Ajit Chouhan // July 30, 2006 at 1:49 PM  

    True : but these are malaise of a throughly unprofessional organisation.

  3. Manish // August 2, 2006 at 12:36 PM  

    Happy Birthday MAyank...Wishing you today because i know ill forget it on 4th.

    Just one point...your example on a VP doing an appraisal for an officer 5 levels below him. Lets assume this organization reorganizes into a flatter structure, then this officer might be only 2 levels below the VP (which is not too far for an appraiser), and the same drawbacks will stay. Flat or Tall, spider might stay.

  4. Mayank Krishna // August 2, 2006 at 10:30 PM  

    Thanks Bhai for B'day wishes :-)

    Well, the point is not whether the organization is flat or tall. The key issue is whether the reporting structure is well designed or not and whether there is proper distribution of authority and accountability or not. If the structure is not well designed and ambiguity prevails then problems will continue irrespective of whether the organization is flat or tall.

  5. Manish // August 5, 2006 at 7:52 PM  

    as promised i forgot your bday on 4th,