In the era before the widespread use of computers, one of the key roles of the management hierarchy was to act as human distillers of information for higher levels of the organization.
The goal was for these individuals to make use of their units, and the data generated from their operations, and to apply experience and unstructured data to this to produce a summarized and highlighted form that could be used by the next level up.
Each level, in turn, integrated wider domains of the organization’s activities, and added more experience and cross-departmental understanding, to produce an enhanced summary for the next level. Yes, people used this distillation to hide unpleasant facts — but cross-departmental understanding soon exposed these.
As a result, each manager deserved his or her span of control, budgetary authority, freedom of action — and her or his work had significance, helping the manager focus on this work and the work of managing their staff rather than pining for their former specific expertise.
Flash forward: the provision of computer systems that could present the details directly to anyone — dashboards attached to business intelligence and performance management systems, analyses built into back office systems, executive information environments, etc. — have undone this set of relationships that formed the purpose of the hierarchy.
Indeed, the arrival of these capabilities has been used to argue for the flattening of the organization, and the opening moves of the transition to a networked, “wirearchic” replacement for traditional organizational models. Along the way, the expertise and knowledge held at the intermediate levels of the organization was lost to view: why accept a summary from an intermediary when you can, at the top, have direct access to any data you need?
“Wirearchy”, or the networked model of the organization, is most definitely part of the standard organization model for the 21st century. It’s important to remember, though, that it blends peer-based approaches with the hierarchy in a union.
Unfortunately, the data seldom if ever tells the full story. We may have the ability to analyse the data, but we’ve lost the background knowledge and the “on the scene” understanding to know whether changes in the numbers are significant or not.
In return, as middle managers and supervisors have lost the ability to make decisions (budgets are assigned but the ability to spend is not, for instance, as “control” is assigned to replace the ability to adjust to ensure achievement of results) and their managerial expertise is not wanted, the quality of practice in management has also fallen (thus justifying, after the fact, the need to control in detail at the “top”).
This has led to today’s organization which struggles to innovate, to grow, or even to improve annually, and where productivity and reductions (in spending, in staff, etc.) have become equated.
The truth about the enterprise is a mix of the structured and the unstructured, the raw input and the judgement that is applied to it.
Cutting out the judgement and the knowledge of situations means that executives lack what they need to direct anything much larger than a single facility. The limits of knowledge creep in far sooner than most suspect.
Is it any wonder SG&A (sales, general and administrative expense) climbs, profitability falls, innovation agendas and growth agendas from the CEO fall into the abyss of action without result and cost cutting and activity freezes remain the only sure path from the top to managing the whole and achieving the final results promised earlier in the year?
The wise senior executive, even as he or she encourages collaboration and the other aspects of allowing flexibility and initiative to emerge “horizontally” in the organization, will strengthen the role of hierarchical management by restoring their full roles.
Only then will the pace of this century allow the opportunity to seize — not respond to — events emerge, and with it, health and growth in turbulent times.