One day, if you no longer report to whoever you used to report to but report to the client. Here are the four components that we have to kick it off
- A flat organization chart – Did away with all managerial positions, creating a completely flat structure. All employees are on self-organizing teams, operating with a mandate to deliver the best value to clients as quickly as possible.
- No separate departments. Traditional divisions between areas such as marketing and operations no longer exist, with teams taking whatever form works best for a given situation. This has the secondary benefit of allowing teams to respond to client needs without hand-offs or relays between departments.
- Complete transparency. To enable teams to become fully accountable, there is company-wide sharing of financial, client satisfaction, and operational information.
- Peer-to-peer accountability. Without managers, team members aren’t answerable to a supervisor but instead commit to each other and to their clients or prospects.
How do things work when there are no clear lines of authority? Here are the answers.
1. Team-Based Feedback
How shall we get feedback if there’s no manager doing performance evaluations? The answer is simple, but not necessarily easy. Feedback comes from those you’re working with, whether that’s in a retrospective or in a one-to-one conversation.
2. Team-Based Budgeting
Few areas have required as much out-of-the-box thinking as financial planning, which in a traditional organization is the responsibility of managers and executives. we can fix this by developing a financial modeling framework that allows teams to plan out a budget based on factors such as projected revenues, aggregate labor costs, and other assumptions.
Teams are given the opportunity to debate the budget, talk about the assumptions that go into the financial model, and argue for a different one if they want to. By and large, teams each create a budget that then rolls up into the company budget.
3. Team-Based Hiring
Without a hierarchical management structure, it’s been necessary to consider how the company recruits and hires. When a team believes a project requires a new hire, they have the responsibility to justify the salary cost with evidence based on the financial model of revenues versus expenses. Job descriptions are posted by the HR team, which prescreens candidates to make sure they meet the requirements of the position. Decision is then up to the team. The entire team participates in the interview process, and they really look at whether the person has the skills and attitude they want on the team.
While salaries aren’t posted, they are structured into five bands that cover the four categories of professional, technical, sales, and operations, with all employees having the ability to move from band to band. Everybody in the team knows what band you’re in, so it’s transparent in that way.
Once a candidate is chosen, the executive team does a final review to make sure nothing’s been missed.
4. Self-Structuring Teams
In general, the company is organized into traditional cross-functional Scrum teams. But with the key rule being self-organization, the process of how teams are structured has evolved to accommodate the company’s unique organizational style.
It’s kind of a mind shift; if we think we need a team that looks like this, then we go ahead and do it. That’s the self-organizing principle at work.
5. Team Presentations
The combination of complete transparency, self-organized teams, and a managerless organization has made for some interesting challenges when it comes to strategy. By arranging meetings in which each team presents their backlog and describes challenges and successes.
The team talk openly about clients who are happy, clients who are unhappy, employee turnover, finances — they own it. Financial data are posted publicly. The process isn’t easy but it’s been the most beneficial piece of the transformation in terms of accountability.
Presentations are followed by a Q&A in which anyone can ask anything whatever they want. It really puts the responsibility and emphasis on the individual and the team, rather than relying on managers and those at the executive level. Everyone in the company knows what everybody else is doing. We’re all much more aware of the impact and values we have on the company as individuals and teams.
Taking the long view with clear evidence of success that includes:
- Consistently higher rates of client satisfaction
- A stronger bottom line
- Improved communication
- Faster decision making
- Improved responsiveness to client needs
- Stronger morale
- Faster learning and improvement at the team level
Financial result is not the primary reason to consider making the switch to a leaderless management style but we can get positive results. However, there are a lot of companies that make more money and grow faster that don’t do things this way but the real evidence of success is that we got the highest client satisfaction. Happy clients help us to increase the ability to recruit and retain people.
Although, less quantifiable but equally central to success is the change in the mindset. Becoming agile can help us work differently, both as individuals and as teams, and it helps the company grow and shift in an ever-changing market as well.
Isabel Leung and Howie Sung are the co-founders of The Agile Eagle, the premiere Scrum, and Agile training and coaching organization.
Join Isabel and Howie in a Professional training course: https://theagileeagle.com/category/professional-training.
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