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Reprint: R1112B
Executives don’t realize it, but a hierarchy of managers exacts a hefty tax on any organization: Managers are expensive, increase the risk of bad decisions, disenfranchise employees, and slow progress. In fact, management may be the least efficient activity in any company. Yet it’s clear that market mechanisms alone can’t provide the degree of coordination and control that many companies require. Is there any way to get the flexibility of a market system and the discipline of a tightly knit hierarchy—without a management superstructure? Morning Star, the global market leader in tomato processing, proves that there is.
Morning Star, which has seen double-digit growth for the past 20 years, has no managers. That’s right—no bosses, no titles, no promotions. Its employees essentially manage themselves. Workers negotiate responsibilities with their peers, anyone can issue a purchase order, and each individual is responsible for acquiring the tools needed to do his or her work. Compensation decisions are handled by local committees elected by the employees, and pay reflects the contributions that people make—not their status. And if staffers find themselves overloaded or spot a new role that needs filling, they simply go ahead and initiate the hiring process.
Morning Star’s self-management model has two cornerstones: the personal mission statement, and the Colleague Letter of Understanding, or CLOU. In a personal mission statement, each employee outlines how he or she will help the company achieve its goals. The CLOU, which must be hammered out every year with colleagues, is an operating plan for fulfilling it. A CLOU covers as many as 30 activity areas and spells out relevant performance metrics.
The system isn’t without its challenges, and it isn’t for everyone. But it has produced a dedicated workforce with exceptional initiative and expertise. And its success shows that it is possible for organizations to transcend the seemingly intractable trade-off of freedom versus control.
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Management is the least efficient activity in your organization.
A version of this article appeared in the December 2011 issue of Harvard Business Review.
Executives are often confounded by culture, because much of it is anchored in unspoken behaviors, mindsets, and social patterns. Many leaders either let it go unmanaged or relegate it to HR, where it becomes a secondary concern for the business. This is a mistake, because properly managed, culture can help them achieve change and build organizations that will thrive in even the most trying times.
The authors have reviewed the literature on culture and distilled eight distinct culture styles: caring, focused on relationships and mutual trust; purpose, exemplified by idealism and altruism; learning, characterized by exploration, expansiveness, and creativity; enjoyment, expressed through fun and excitement; results, characterized by achievement and winning; authority, defined by strength, decisiveness, and boldness; safety, defined by planning, caution, and preparedness; and order, focused on respect, structure, and shared norms.
These eight styles fit into an “integrated culture framework” according to the degree to which they reflect independence or interdependence (people interactions) and flexibility or stability (response to change). They can be used to diagnose and describe highly complex and diverse behavioral patterns in a culture and to model how likely an individual leader is to align with and shape that culture.
Through research and practical experience, the authors have arrived at five insights regarding culture’s effect on companies’ success: (1) When aligned with strategy and leadership, a strong culture drives positive organizational outcomes. (2) Selecting or developing leaders for the future requires a forward-looking strategy and culture. (3) In a merger, designing a new culture on the basis of complementary strengths can speed up integration and create more value over time. (4) In a dynamic, uncertain environment, in which organizations must be more agile, learning gains importance. (5) A strong culture can be a significant liability when it is misaligned with strategy.
What’s Your Organization’s Cultural Profile?Leaders can use this worksheet and accompanying questions to determine what kind of culture currently operates in their company.
How to Shape Your CultureStep-by-step advice for arriving at an aspirational target
Convergence MattersHigh levels of employee engagement and customer orientation correlate with closely aligned views among employees regarding which cultural characteristics are salient in the company.
Context, Conditions, and CultureWhen assessing a culture’s strategic effectiveness, leaders must keep in mind two germane external factors—region and industry—and three internal considerations: alignment with strategy, leadership, and organizational design.
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