Structure with no hierarchy and no formal chain of command
Imagine walking into an office that doesn’t have any management and no one to report to and employees are given complete freedom to choose and decide the work which is core to one’s skills and strengths.
The Pied Piper of Hamelin is one of the most popular fairy tales which we all have heard during our childhood days. The Pied Piper played a mesmerizing tune and all the town’s children followed him as he went along. In the realm of today’s corporate world, we also have leaders, managers, and bosses, whom we are supposed to follow, listen to, and obey. What would happen if we do not have a Pied Piper to follow, would we be directionless? Would we lose our goal or can we fantasize about working in an environment without any bosses around?
Let us first try to understand the basic psychology around the terms “follower” and “freedom” before we discuss further whether we can ever see ourselves in such organizations.
Understanding Basic Human Psychology
Elements of Human Behavior
Sigmund Freud, the founder of psychoanalysis, had defined a phenomenon called ’dynamic transference’ which explains a lot about the everyday behavior of organizations. A number of studies have shown a close link between positive transference and productivity.
‘Transference’ is the emotional fix that binds people to leaders. The employee under the influence of positive transference views his/ her leader as smarter, more charismatic and a better human being than the person is in reality. This situation then creates an illusion that bears no relation to the fact and the follower is dominated by irrational feelings like a need for praise and protection. However, good leaders would be grounded in reality and would not fall into a trap of trying to live up to the idolized image created by their followers.
So did the followers of Piped Piper at the least believe that he is going to provide any kind of protection? Are we then also looking at our leaders/managers or bosses to provide a layer of protection but protect from whom, what, and why? Is there insecurity of employees losing jobs, bad performance ratings, or an underlying desire of receiving praise or appreciation in any form of promotion or any reward?
“The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly.”
Sigmund Freud
Now let us look at the other aspect of Freedom. From the viewpoint of motivational psychology, there are basically four ways of influencing behavior: reward, punishment, restraint, and compulsion. Each of these ways of influencing behavior has a different impact on our sense of freedom. The greatest sense of being bound comes from compulsion.
If one is physically compelled to do something, we feel a total absence of freedom, even if it is something we would willingly have done in the absence of compulsion. One regards reward motivation as maximizing freedom and compulsion totally deprives one of freedom. The general perception is rather being the boss has control over other employees rather than the subordinate or follower who is under the control of the boss. But the dilemma is trying to control other people because other people don’t want to be controlled by someone. To make people listen to someone is the most difficult task since it entails instilling confidence among them that it would be in their self-interest to listen.
“Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility.”
Sigmund Freud
Exploring The Options Beyond The Traditional Organizational Structure
Until You Believe You Have Options, You’ll Continue To Feel Stuck
So can an organization create a structure with minimal titles, rules, and institutional controls and build upon a collaborative, participative, and egalitarian approach to find solutions and be successful at it? An organization can be characterized by self-management with no hierarchy and no defined leadership wherein employees can have greater freedom and learn different aspects of the business and expand their knowledge, skills, and expertise by not being restricted to one specific functional area. If so, can the proposed structure support the organization in fulfilling its objectives, positioning it strategically, integrating and coordinating activities, standardizing and maintaining its capabilities, and gaining a competitive advantage?
Is it really worth exploring the options beyond the traditional organizational structure of either functional, divisional, matrix, or flat for the sake of gaining freedom and coming out of the “follower” stereotype cast? But one thing which is common is that each of these structures offers an imperfect solution to the problem of accountability which will also be the case even if we are able to adopt a new and very adventurous organizational structure to adapt with much caution and trust in our people. Before we look at all the reasons for imperfections, let us discuss first the model which provides an alternative to the traditional organizational structure.
What Is Lattice Organization Structure?
Bill Gore and Vieve, his wife, founded the company mid-century when companies drove productivity through hierarchical control. To drive innovation, they designed a nearly flat organization that resembled a lattice. “Lattice Structure”, is derived from the world of physical sciences where there is a scheme of arrangement in space of isolated points (lattice points) in a regular pattern, showing the positions of atoms, molecules, or ions in the structure of a crystal.
If we replace the atoms or molecules with people who work in a structured close-knit manner, operating in a well-coordinated and participative environment with small workgroups capable of working independently as the corporate entity itself, then that structure would qualify as Lattice Structure.
Characteristics of Lattice Organization Structure
The employees of such a structure should possess a very high sense of self-commitment, and natural leadership and be capable of conducting direct transactions lacking any assigned or assumed authority. It improvises the level of responsibility at work, with the skill that matches employee’s personal needs, and also makes employees choose working platforms as per their wishes and skills. It can in itself be a source of competitive advantage as it is not a model or system which can be easily replicated.
The lattice structure by its very nature cannot be transplanted into other organizations with ease because it requires a drastic cultural overhaul among its employees and the processes of the company. It requires a clear definition of long-term objectives, values, and principles, and a firm understanding and approach to positioning and building the competencies of the organization. This lattice is a team-based concept and connects every person to everyone else. Success or failure is the joint responsibility of the entire team to accomplish a particular initiative.
A lattice organizational structure creates more flexibility and makes employees adapt more quickly to changing market conditions, and take better advantage of their talent pool. Giving workers more responsibility, the opportunity to change their work patterns, as well as to balance their work and home life, makes way for better workforce retention and improvised productivity.
It empowers employees to customize their careers as per their needs and build careers that offer multiple paths for learning and growth. For example, a project team with this structure would discuss the targets, and goals to be achieved for its own department. A project team with consulting firm delivering a project with Business Intelligence tools may discuss within the team the relevance of current tools, and also the changing market conditions of new technologies of AI, Big data, and Robotics and may decide to migrate from BI to Big data technologies platform to better serve their clients. Accordingly, they would cross-train their existing talent pool, redefine their recruiting strategies and accordingly empower each member of the team to take control of their career path and move in the direction of an enhanced learning growth path.
The Lattice Model
A lattice organization uses a lattice model that consists of three lattice ways:
- Careers to suit the needs of individual workers.
- Flexible work scheduling for a work-life balance by taking on more or less responsibility.
- Full participation and providing ways for workers to contribute ideas and suggestions in every area of the company.
In India, there are very few true lattice structured organizations. However, companies like Cipla, Apollo Tyres, and Dr. Reddy have adopted a flatter structure over a period. In today’s world, organizational structures are, on average, 25 percent flatter than they were 20 years ago. Technological advances, globalization, and the rise of knowledge work have resulted in work and workers being less bound to physical locations or set hours; teams are often dispersed across locations and time zones. So is it the Indian mindset (dealing with Gen X and Gen Y mindset mostly), culture (follower), education system, or the upbringing values (controlled environment) which are the inhibiting factors for organizations from adopting more innovative structures that might benefit the majority of the workforce?
If given the freedom, is it possible to create value by being responsible enough, leading in innovative ways, and extracting the best talent and skill within the given pool of employees without being coerced or being directed, would the system be mature enough to collaborate and participate within teams to drive the efforts in a concerted way and grow not only as individuals but together as a team? If the answers to most of these questions are yes, a solid structure with fluid responsible support systems can surely be built around to form a true world-class lattice organization.
Challenges of Lattice Organization and How to Overcome Them
Without a doubt, there are challenges to a true lattice organization that are not easy to overcome. Lattice organization structures have been most successful in new organizations. To transform from a hierarchical to a lattice organization structure is afflicted by implementation challenges.
As a result, organizations that want to become more flexible should try to gradually change their structure, taking on some aspects such as self-managed teams; and avoid sudden radical change. Not all employees have the ability and self-discipline to thrive without management, potentially creating a chaotic work environment. The flexibility of the lattice organization structure enables employees to shape their careers by working in different teams making roles difficult to define.
The creation of talent acquisition, talent management, policy enforcement, forming compensation and rewards structures, performance standards, and appraising and motivating employees pose some challenges which need to be addressed in a very focused and strategic manner.
Let us now look at each of these challenges closely and a way forward to move ahead overpowering the obstacles.
Talent Acquisition
Most companies follow the usual steps of recruitment planning, strategy development, searching, screening, and lastly evaluation. All these steps are either conducted by an in-house recruiting team or through vendor staffing companies. As the success of lattice structure depends highly on the like-minded professionals who choose to work collaboratively, it is of imperative importance that the right set of people are selected who align and augur well with the concept of the lattice structure. Can this be achieved through the traditional methods of recruiting? What are the challenges with the traditional method and how can we overcome the challenge, if any?
In a traditional setup, the requirements of the position are relayed from the department or teams which has the open position to the staffing or recruitment teams. The staffing team would validate the requirements and make sure that the Job description is in line with the requirement of the position and then accordingly source the candidate. The final selection ensures both the cultural fit and the skill competent assessment. Once the person is inducted into the respective team, the person may or may not feel to be a part of the overall ecosystem of that team because of the inherent team characteristics and dynamics.
The team may make all efforts to absorb and make the person an integral part of the team which at times may succeed or fail. In a lattice structure, the respective team themselves are responsible for the recruitment and selection of candidates. The team forms a panel of 10-15 members and would be involved in a complete end-to-end recruitment cycle of the candidate. The candidates are screened thoroughly and as many as ten references might be contacted for each applicant.
. What this process ensures is the complete accountability of the team towards the selection and gives total control over the process of choosing the right candidate. Different variations can be made to this process depending upon the unique requirements of each organization.
Talent Management
We all are, irrespective of our identity as an employee, manager, or executive accustomed to a hierarchical structure; the structure which provides us with day-to-day guidance on which tasks to accomplish, how to accomplish them, the framework of policy and guidelines to guide our behavior, etc. So if there are no levels or defined hierarchy who provides guidance and support to the employees, does the organization needs an effective succession planning, does the organization need to develop retention strategies, what competencies are critical to the success and how do we identify learning opportunities and impart learning?
The lattice structure thrives on a very high level of entrepreneurial spirit that requires individuals to operate in self-discipline and a shared decision platform model. Not only they are responsible for their individual growth but also make sure that they take the team together and grow as a team as well. Few companies who operate in the lattice structure model created title-free organizations. They had defined majority workforce as “Colleague”, “Associate”, “Experts” or “Partner”. There is, however, one additional title that employees can earn is that of “Leader” “Sponsors” or “Mentor”. The sponsors or leaders commit to the success of an associate or colleagues. During the onboarding process, the sponsor’s role includes coaching on the company’s culture and a unique organizational structure providing guidance on development and learning opportunities, providing feedback, and ensuring the associate’s contributions are well recognized.
The title of “leader” actually comes with duties (not privileges) – like helping align other associates behind business goals, acknowledging the accomplishments of others, being a role model, and helping others with their problems. Each Colleague, Associate or partner enters the organization with the same set of rights as any other colleague. No one can force the other person to do something they do not want to do. There is no strict job description to keep people’s jobs fluent. It is therefore essential to have a clear goal for all employees to work towards a collective mission statement.
Policy Enforcement
In a lattice organizational structure, each person is accountable only to himself. All interactions are voluntary. Organization may decide to have department wise mission statement that can be based on the organizations overall mission statement. Whenever a conflict, disagreement, or problem arises, employees have to solve it themselves.
The progressive conflict management steps can involve having a confidential ombudsman, a third party involvement, a panel of a diverse set of people or even approaching the founder of the organization depending upon the severity of the conflict. Usually the lattice structure organization does not believe in layoffs and cutting pay, which, has a high degree of being non-motivating factor for employee’s morale; instead, the company uses a system of temporary transfers and voluntary lay-offs.
Compensation and Reward Structure
Compensation and reward happen to be one of the complex elements to set up in a lattice structure. This is because of the fact that most organization frames their reward and compensates strategies around the differential work efforts, behavior, and learning that acts as a great motivating factor.
The lattice organizational structure lacks the ability to form compensation structures according to qualifications and level of expertise. There is also a lack of standardization to ensure salaries and benefits are competitive, internally and externally. Compensation and performance bonuses lose their importance within a lattice structure. Entry-level salary has been in the middle for comparable jobs. Compensation is designed around three forms: salary, profit sharing, and Stock Ownership Program (SOP).
The compensation team relies on customers’ input, leadership ability, and willingness to help others develop to their fullest potential. Profit-sharing follows a formula based on Economic Value Added (EVA). Annually, a company can also buy company stock equivalent to a fixed percentage of the Associates/Experts/Colleagues annual incomes, placing it in the SOP retirement fund.
Performance Standards
Performance evaluation is an essential component for employee development in traditional organizational structures; therefore, a lattice organization lacks the fundamental step to establish performance standards. In organizations based on Lattice model the company instead of narrow focus on upward progression moves to a multidimensional career model. Career moves across organizational silos make employees more versatile, increasing strategic flexibility. Expanded career options enable people to find more ways to fit their lives into their work and their work into their lives.
Motivation
One of the most important strategies to get best out of an employee and to retain is to reduce work-life stress because the statistics has shown that over seventy-one percent of the employees of present business world cited its culture and environment of the company as one of the main reasons they stay with the company. The organization has to not only believe and allow everyone to share in the risks and rewards of the company, but also give them an added incentive to stay committed to its long-term success, and always consider what is in the best interest of the company while making decisions.
Final Thoughts
Companies that act now to adopt lattice organization will design a bold new script for confronting the changing world of work. We still may need Pied Pipers to help guide and provide right direction in general but if someone can find people with high level of self-commitment and discipline with in-built natural leadership qualities, the realm of doing away with Pied Pipers can be a reality. It will really pay the effort to focus on finding such talent initially and thereby building on to such structure which will then later on act like a magnet to attract such talent on an ongoing basis. Organizations have done it in the past and no reason that it cannot be done at present.
GeopFX assists their clients in translating their strategy into implementable plan by assessing both the tangible and intangible parts of the business, such as workforce, structure, and process, as well as motivations, connections, and culture.