The CEO of an organisation asks all the department heads to send any spare resources back to the centre to fund one particular vital project. Two weeks later the CIO has a meeting with a divisional director in an operations team.
“That looks like a sensible project. Maybe we can do something with it next quarter,” says the CIO.
“Why not now?” enquires the divisional director.
“All the spare resource has gone back to the centre. I won’t have any money until the next quarter.”
“Don’t worry about the money,” says the director conspiratorially. “I’ve some tucked away.”
Now I’m sure this would not happen in your organisation. Well, I’m fairly sure unless you work in an organisation of more than 150 people. This is a sort of magic number for companies. It seems that communication problems and hidden agendas emerge far more obviously when there are over 150 employees – give or take a few.
Once that organisation grows and splits into various silos the problems multiply dramatically. A tension develops for managers between the aims of the organisation as a whole and running their own part of the business.
Busy doing nothing
I worked in a large public company where one business area recruited 100 staff for a particular project that ended up being postponed for six months. These extra staff were contracted for a year and were just sitting around doing next to nothing. The head of the department announced to the rest of the organisation: “Sorry I screwed up. I’ve 100 staff spare who would like them?”
“How much would these staff cost me?” asked one of the managers.
“Nothing. We’ve arranged to pay them from my budget so they wouldn’t cost you a penny.”
“Where will they sit?”
“I’m sure we can work that out.”
“Who will they report to?”
“Er… I’m not sure yet”
“Forget it. Seems more trouble than it’s worth.”
This silo mentality is a huge blockage in organisations. There is a real problem breaking the walls down. The more established the company the tougher the walls. It gets to the stage where each silo is almost a self-contained unit. While there are benefits here (operating as a small business, good communications within the area, sense of pride in the team), there are huge disadvantages as well. The problems of communication across areas and sharing resources that people have heavily outweigh the advantages. It becomes rare to loan people out or move people. Budgets are guarded. The ‘centre’ becomes the enemy.
"As more people join the group the less effort people put in"
For instance, toward the end of the financial year, large organisations tend to look at budgets for specific areas. I’ve worked in departments that would have a spending frenzy in March.
When asked why they were going crazy buying far more paper clips and pens than they could ever use it was explained that if they didn’t spend their allocated budget then it would be cut next year. When asked why they didn’t explain this to the finance section I was given the ‘you don’t know how it works around here’ look.
Diffusion of responsibility
It seems that the values at the centre don’t apply to the departments. There is the ‘they’re not our values’ mentality. This isn’t necessarily just about a silo mentality. There is a problem with values. They sound good. No one would argue with them but how far would people actually go to uphold them.
In recent years there has been a spate of organisations where the values seem to have been ignored by everyone. Enron, Parmalat, Shell and I guess, for some, this is to do with a ‘silo mentality’. But for me there’s another factor here. It’s been identified as ‘social loafing’.
Try this experiment when there are a dozen or so people in a room. Get one person to clap as loud as they can. Then get two people to repeat this. Then four, then eight. What you should see if you produced a graph of people versus noise is a straight line. In fact what you see is a gentle curve. As more people join the group the less effort people put in.
The values in organisations are susceptible to social loafing I would guess. ‘I thought someone else would do it’ is a common response to missed targets and values. Add this to a silo mentality and there are real problems.