Saturday, March 23, 2024

Eliminate the Bosses? Organizational Transformation or Corporate Fad?


The Wall Street Journal's Chip Cutter has written about the transformation underway at Bayer, led by its new CEO, Bill Anderson. The article is titled, "One CEO’s Radical Fix for Corporate Troubles: Purge the Bosses." The 160-year-old company has struggled mightily in recent years, particularly after a problematic acquisition of Monsanto. Anderson's transformation plan calls for the establishment of 5,000 to 6,000 self-directed teams, as well as the elimination of many middle management roles.  He has taken aim at the pile of rules and regulations that govern employee conduct and decision making, hoping to streamline many processes.   

While the ambitious plan has many attractive features, it raises some concerning questions in my mind.  First, as I read the article, I'm reminded of the quote by the American writer and former State Department official Charlton Ogburn, Jr. He once said, "We tend to meet any new situation by reorganization, and a wonderful method it is for creating the illusion of progress at a mere cost of confusion, inefficiency and demoralization."  In many companies, attempts to redesign the organizational structure occur frequently.  Yet, CEOs are fooling themselves if they think that they will find an optimal organizational structure.  No such thing exists.  Each structure has its weaknesses.  Moreover, many transformation attempts create confusion and anxiety, as employees struggle to determine who has the decision rights on key issues.  

The WSJ article mentions that Anderson's transformation plan has introduced a whole new vocabulary regarding titles and processes.  Employees need to attend training to understand their new roles and responsibilities.  While a common language can be helpful, sometimes we are simply replacing one set of acronyms with another, without effecting profound cultural change.  Anderson will have to watch for signs of confusion in his workforce.  Moreover, there will always be some employees who think to themselves, "This too shall pass," having seen what they consider other corporate fads come and go.  Anderson will have to persuade them that this organizational transformation is not another fad.

One final thought from Wharton’s Peter Cappelli: he has compared serial reorganizing to the common tendency for doctors to administer antibiotics for minor illnesses.   He has argued that such prescriptions might address the pain and discomfort of the moment, but have adverse effects over the long run.   Why?  He argues that employees may lose faith in their senior leaders if they don't understand the rationale for yet another restructuring, if they are unclear about their roles and responsibilities, or if they think that it is yet another "flavor of the month."  

Anderson's plan has the potential to eliminate or streamline inefficient processes, while empowering employees closer to the actual work to make important decisions.  His goal is admirable and well-intentioned.  He just needs to make sure that he focuses on changing the culture and behavior, and not get too caught up in the boxes and arrows on organization charts.   

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