Eliminating Middle Management with Technology
November 24, 2008
The modern manager has at his disposal tools and technology that enable a flattening of companies' organizational charts. This flattening process not only leads to lower administrative overhead, but also brings a company's top management closer to the people who are the lifeblood of an enterprise as well as to the customer or client who is purchasing the goods or services produced. This closer relationship between upper management and what would have traditionally been considered the "lower levels" of a company hierarchy gives managers unfiltered insight into the company's operations.
As we have watched the financial crisis unfold, and now as we read about the would-be collapse of the world's largest financial institution, Citigroup, we find that it was management's disconnect from what was happening in the day-to-day operations of the company that permitted billions of dollars of Citigroup's portfolio to be invested in toxic subprime mortgages & derivatives and then highly leveraged to purchase other derivative assets that ultimately failed. If you don't believe that this was the problem, read the following article from the International Herald Tribune:
Technology can "shrink" the size of enterprises large and small by allowing employees usually termed "lower level" to directly access information, and to publish information that is then accessible to people in top management. By creating an organizational culture that rewards people who point out problems (rather than punish them, as is frequently the case), Enterprise 2.0 information technology can not only eliminate the need for significant numbers of middle managers, but simultaneously eliminate some of the very disincentives to organizational transparency that exist in business today.
Imagine if an associate level securities analyst at Citigroup had realized the massive quantities of potentially endangered securities the company was acquiring, and wrote an internal blog about it, and that blog was brought to the attention of the CEO. The CEO could then commission further investigation into the claims, and might steer the company on a different course thereafter. However, because middle managers care most about job security, they are quick to dismiss claims of fundamental misdirection, and are also quick to punish people who point them out. This creates a negative organizational culture that ultimately causes collective mismanagement, since most mismanagement is based on bad or insufficient information and not on mere bad judgment.
If you are growing your business, consider saving long-term costs, not only in personnel, but also in the cost of mistakes, and employ technology early in your growth cycle. From integrated project management tools to empowering individuals to contribute information to a widespread data repository, endless options exist for making your business more efficient and contributing at the same time to a better organizational culture that rewards transparency and expects the highest quality results out of every member.
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Posted by: RoaloAlaltmab | July 05, 2009 at 09:50 AM