In a BBC radio programme Peter day’s world of business : Companies without Managers, Peter Day investigated companies that no longer have a traditional management structure. Instead people are given autonomy over what they do. This Article is based on that investigation.
“We don’t have a management team. I think that management is not only dysfunctional. Management can even be destructive“.
(Owner of a Community District Nurses organisation)
Do managers breed administrators?
Is a lot of what managers do useful for the service that a company delivers? It is interesting how there can be such discrepancies between the people delivering a service/product to the client and what “management” think should happen. (A lot of this happens when the organisations purpose is not clear).
As a person in a management role requires information about what they are supposed to be managing, then they are asking for data which leads to pressure on the administration. Administrators are then required because they have to create all kinds of lists and information for the management. However, if the workers deal with the decision making and take responsibility, then overnight there is a dramatic reduction in the need for large overheads and back office.
In all organisations certain management decisions need to be made. For example:
- Delivery of output, whether it is a product or service.
- Ordering/purchasing.
- Deciding who gets hired.
- Compensation plans, bonuses etc.
- What happens if people aren’t delivering what was agreed.
- Settling dismissal and redundancy issues.
The question is, “Are managers the best people to do these tasks?” The difference in some companies is that the workers do these tasks instead of a specific manager.
You say Tomato, I say Tomato
Morning star is a company based in California and processes tomatoes. Back in the 1970’s the story goes that on the way to work the owner saw people dropping off their children at school and it occurred to him that outside of their day job, people are raising a family, getting married, taking out mortgages and managing multiple complex things. So if they manage themselves at home why couldn’t they do it in the workplace?
The workers are responsible for their part of production. “Who else is better placed to decide if parts need to be ordered than the person operating the machine?” says one of the workers.
They have agreement letters between each other for the level of their production.
If two workers have a disagreement and it cannot be resolved then a third person (a colleague) is brought in to decide. If that doesn’t resolve it then it goes to a group.
Compensation is decided by a small committee who are formed through consensus and anyone can ask to sit on it. At an appropriate time feedback is sort from colleagues and put together with a letter requesting a pay rise or bonus.
A worker describes that it’s not for most people as one guy joined the office and left within two weeks as he did not like the idea that other people were at the same level as him and that he could not tell people what to do.
Has it been successful over the last few decades that it has been operating this culture? Apparently it processes more tomatoes than anyone else in the world and has a turnover of $700m. Inc.com states that “Morning Star can pay 15%more in salaries and 35% more in benefits than the industry average because it’s not paying managers and productivity is so high”. So I guess, “yes” is the answer.
Buurtzorg
Another company that they explored is a community district nurse provider in Holland. Originally setup by Jos de Blok, a nurse who was frustrated with how the companies he worked for were providing service to patients and how nurses were been treated.
So starting completely from scratch with four nurses and himself covering nights and weekends, he started the company. It consists of small groups of 12 nurses that work together and make decisions based on consensus. The phone is passed around each day and therefore each member has the responsibility on whether they can take on additional patients. There is no manager. One group interviewed said that they agreed to come into work on their days off if they are busy.
They hire and fire within their teams based on consensus. They are also encouraged and coached to build relationships with the local GPs and hospitals themselves.
Is it successful?
Depends on your definition, but in under a decade it has grown organically from just the owner and a few fellow nurses, to over 9000 nurses offering community based (home) care services to more than 60.000 patients a year. They claim to be cheaper than their competitors even though they pay their nurses more, because they require such a small overheads. A back office team of only around 60 people.
When the CEO was asked what he does in a typical week then it seems he does exactly what a leader should be doing. Not managing things, but inspiring:
- He visits 3-5 teams a week to see how things are going, supporting them and finding out how things can be done better.
- Inspiring his people through blogging and spreading the ethos.
MattBlack Systems
The third example was based in Dorset and was a smaller British engineering firm. Each person is an individual project and they are responsible for everything including profitability of the project, ordering parts and audit. The owners say that it is paradoxical to say that they got rid of the management as everyone is now effectively a manager.
What was interesting is that no employees from the original firm (before it was taken over by the two new owners), work there anymore. So it definitely isn’t for most people.
An important observation is that people within these types of companies start to compete for recognition and being the person to be asked for advice. As they’re not competing for advancement up the corporate hierarchy, because there really isn’t one. A complete mind shift from “how can you help me get promotion”, to “how can I help you”. Fascinating.
Those people that want to self-manage, take responsibility and come up with ideas, work for these organisations and their competitors get everyone else.
I regularly write and talk about the need for us all to be more Entrepreneurial in this economy and move away from the old industrial model of expecting to be told what to do, however difficult it is for us. So it is interesting to explore companies that really have embraced the concept and are very successful.
Matthew Broomhead
“Raising the level of Business Skills in Britain”
Creator of Broomhead Business Channel