No boundaries for information, but hierarchy for decisions

A company can react faster to customers and add value if data, information or operations flow quickly within hierarchies and across functions.


Consider the following real-life scenario with names changed –

Ajay, an employee, called me to vent his frustration over his manager Suresh. As an HR business partner, I listed as he revealed that Suresh was constantly nitpicking and critical of his performance, at times in public. Ajay had been working for some time along with Suresh and had a working relationship. But according to Ajay, over the last few months, Suresh had been repeatedly insulting him and putting down his work. It seemed to him that Suresh was trying to get him out of the organisation. “According to Suresh, now I cannot do even one thing right”, grumbled Ajay.

What could be the possible reasons, I wondered.

• Is this Suresh’s usual trait? – No. Ajay had a working relationship previously.

• Has Suresh become insecure? – No. There had been no such change at work that could cause Suresh to suddenly become insecure.

• Does Ajay have performance issues? – No such instances have come up, based on feedback.

• What do other team members feel? – Other team members have noticed the change in Suresh’s attitude towards Ajay, but they admit there has been no change in his attitude towards any of them.

• Are there any personal issue stressing Suresh? – No such news received from anyone till date.

A casual conversation with Suresh did not yield much information regarding the problem raised by Ajay. However, on prodding further, Suresh opened up about his frustrations with his manager, Mayank. “Over the last few months, Mayank is directly calling Ajay and speaking to him, including assigning work. I don’t know why he is bypassing me. I feel ignored and unsure about his trust in me. I don’t know whether to confront Mayank with this issue or directly speak to Mayank’s manager about it.

This situation is typical in every organisation that endeavours to share data and practices openly across functions and hierarchy. This speeds up the turn-around-time and encourages cross-pollination of ideas, all leading to higher value for the organisation. However, managers fear loss of authority and control and look down upon any team member who attempts this. The worst part is that it often makes managers insecure. The situation is exacerbated when you have a manager of managers who does not comprehend the effect of his actions on those reporting to him.

I met all three of them for a one-to-one meeting to clarify a very critical aspect of organisations today – the Chain of Value Creation Vs Chain of Decisions.

Michael Porter introduced the concept of value chain in his seminal book, Competitive Advantage. He defined ‘value chain’ as a set of activities that organisations carry out to create value for their customers. To create a competitive advantage, we need to understand how the company creates value and look at ways to add more value. For instance, instead of going through each hierarchical component in the structure, a company can react faster to customers and add value if data, information or operations flow quickly within hierarchies and across functions.

At the same time, the formal structure is crucial for decision-making. Hierarchy gives guidance on managerial authority and clarifies who the final decision-maker is, and what decisions can be made at each level. It has its own place in an organisation.

Boundaryless for Information, Hierarchy for Decisions

Navigating the contradiction between Chain of Value Creation Vs Chain of Decisions is a critical challenge for all organisations.

The best way is to ensure that information, data or operation flows without boundaries to add more value. However, any decision or command has to flow only as per the hierarchy, to ensure that each person is accountable for the decision.

Additionally, I have specific recommendations for each of them using the concept of Chain of Value Creation Vs Chain of Decisions among others –

For Ajay

• Mayank will ask you for information, as it creates value for the customer. However, there may be conflicting demands on your time. Hence, keep Suresh in the loop so that your work can be suitably reassigned and important demands met in the order of priority.

• In today’s environment, while it is normal to interact with the skip-level manager; you cannot bypass the organisational chain for decisions. You need to go up to the chain of command for the decisions.

For Suresh

• An open channel of communication is an organisational imperative in today’s environment, to increase value. As a manager, seek influence, not control. Paradoxically, the only way to increase influence is to reduce control. While not easy, it is critical that we learn this way of management.

• In case of any concern in future bring it to your manager. It is important that we learn to have tough conversations with our reporting managers, which will help execute our work better and improve the organisation instead of a passive-aggressive response.

For Mayank

• Clarify objectives and Ajay’s time required with Suresh, as Ajay should not get any conflicting demands from Suresh. If Ajay is unsure about whose work to give higher significance, it will lead to misalignment and the organisation will suffer in the process.

• Communicate clearly that data can flow across functions and hierarchy, but decisions will flow only as per structure. This applies even if your reporting manager asks for data from you subordinate. Lead by example.

• What got you here will not get you there. The parameters of evaluation as a people’s manager are very different from the parameters of evaluation as a manager. Your role is no longer to solve everyday issues, but to set the strategic direction and bring in new practices and innovations to ensure exponential growth for the organisation. This implies that you need to set the organisational processes such that you are able to keep track of critical elements and reduce focus on everyday routine issues.

Leaders need to clearly communicate the expectations of Boundarylessness for Information Vs Hierarchy for Decisions to all employees and personally walk the talk in their daily lives. The understanding of the seeming paradox of Chain of Value Creation Vs Chain of Decisions and when to use either of the two chains gives direction to employees and helps navigate the contradiction. Additionally, it will lead to reduction of interpersonal issues between managers and their teams, resulting in a healthy working environment.

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