An evolution for some but still the norm for many – silos in an organization once seemed the way to go. Breaking the organization into independent profit centers, inputs, outputs, and team members allows for easy tracking and measurement. CEOs have mastered the structuring of various profit centers into individually functioning sub-sections of the business, because it is easy to conceptualize and to manage.
In the agricultural sector, the word “silo” refers to the separation of goods in preparation for storage. In the second half of the last century, organizational and management theory was influenced heavily by principles of structure and form, which treated enterprises as independent functional units. When taken to an extreme, this approach facilitates a “silo mentality”. Indeed, reporting lines through positions of power with concepts such as ‘department’ itself reinforces such thinking. Arguably, the more command and control required by an organization to meet its purpose, the more silos will prevail. Military, security, and safety-based organizations, for example, could not operate effectively without these silos.
But is a silo mentality suited to the modern world of enterprise, which relies on collaboration not only within but between organizations?
Why Silos Are Disastrous for Your Business
Silos and departments were set up with good intentions. They were efficient and highly focused with experts in each sector. Most importantly, they were easy to measure and track over time. In today’s world, a silo mentality often leads to internal politics and competition, which can have a severe impact on the internal effectiveness of a business. These silos can damage a business from within, creating organizations that aren’t united, suffocating creativity and innovation.
The lack of a one-team mentality encourages department leaders to limit their focus on internal well-being, sheltering their teams from senior management. Productivity suffers where silos exist due to the duplication of service functions. These elements stimulate a vicious circle where frustrations and tension in the organization lead to stronger silos and ever-worsening performance.
A silo mentality also negatively impacts the customer experience. In the silo model, a client may pass from department to department, asked to restate the same information three or four times due to the lack of internal information sharing. This creates duplication and inefficiencies, and ultimately damages the customer journey.
Finally, the inability to align a team behind a unified vision with clearly defined goals may be the most damaging aspect of workplace silos. In a siloed company, every team, every department, and often every individual, works toward their own goals, using their own tactics instead of working toward a company-wide vision.
Bonus schemes are an important cause of the silo problem. There is an old expression, ‘’Show me the bonus scheme, and I’ll show you your strategy’’. Bonuses and incentives must reward the behaviors that leaders want to create in their organizations. If you don’t align your bonus scheme with your strategy, organizational performance and behaviors will differ from those that you wish to see. ‘’I’m not going to help them, because I don’t gain anything by helping them’’ – this is a silo mentality at its worst, yet it’s very common in many companies.
Four Critical Steps to Enhance Cross-Functional Collaboration
In order to build collaborative teams, reduce silos, and increase the creative capacity of your organization, here are the most important steps to take:
- Set a common vision and communicate consistently. Many organizations share a strategy at the beginning of the year, and then drop it for the rest of the year. Create a common vision and set the right tone. Business leaders must communicate this vision consistently as the months progress, and set an example by behaving in the way they want their employees to behave. Consistent communication encourages a unified vision amongst employees, motivating them to work towards shared goals as a team.
Companies should also dedicate time during the onboarding of new staff members to sharing the overall company vision and strategy. New employees should receive guidance on the importance of their role in implementing this strategy, rather than focusing only on their role within their department.
- Align compensation and benefits schemes with your strategy. Departments are often rewarded according to their own metrics, rather than according to the overall strategy. This often results in a silo mentality, particularly when compensation and rewards are competitive. Instead of employees having to compete for resources, they should be evenly and effectively distributed. Therefore, bonus schemes and incentives must align fully with the overall organizational strategy, and should be designed to reward cooperation rather than competition. By building a consistent and well-articulated compensation structure from the outset, companies can create a more cohesive culture that is positioned to drive both innovation and profit.
- Incorporate interdepartmental team members. Keeping the focus on the key goal and strategy will help to overcome barriers between groups of people. Distributing team members across projects will shorten the communication curve. It will also make the implementation of strategies easier over the long run. Using a multifaceted approach means that individuals will share functions according to the requirements of the project at hand. Rewarding positive teamwork and interactions will greatly reduce the damaging effects that inter-departmental silos have on a business.
- Analyze interactions between teams and individuals – Every organization has its formal structures. But traditional organizational charts do not represent the true interactions between individuals and teams. Network Centrality® has innovative tools that analyze the patterns of communication, collaboration, and trust between individuals and teams. It looks holistically at an organization, instead of focusing on individual employees, and creates a visual map of an organization’s internal communication. By analyzing and visualizing the formal and informal relationships in your organization, you can identify where your network structure needs improvement.
- Centrality – To be central is to be influential as compared to others within the network. This is someone who is connected to more people. They can get more information and reach out to more people quickly because they’ve worked to build solid relationships.
- Outreach – This is a person who reaches out to others more, can gather more information, and get more social support from others. Generally, they tend to contact people more often.
- Receptivity – The opposite of Outreach, this is how much others within the network approach the person. People higher in Receptivity tend to provide others with information, guidance, and could be seen as an expert in their area.
- Access – This type of person can contact others (including those whom they are not directly connected with) effectively/quickly across various parts of the network. They can be very helpful when there is a need to reach out to many people urgently.
- Linkage – A person with high Linkage is great at connecting separated people/groups. They will act like a glue amongst groups or people who otherwise may be very siloed.
The results generated for each individual are calculated relative to the others within the network and can help to explain the social dynamics of the workplace. The results could, for instance, show who carries the most influence and who would take the most knowledge with them should they leave.
Understanding these descriptions within your organization will reveal the qualities of individual members. This insight can then be used to maximize strengths, determine career paths, and mitigate risks.
A mid-sized IT Consultancy of 60+ employees in Europe experienced a decline in sales. Using our innovative Network Centrality® solutions, we were able to visualize how disconnected the sales team was from the rest of the organization.
We discovered that their sales team bonus structure was the root cause of the problem. The structure created too much internal competition. Silos were rampant, to the point where some individuals worked in complete isolation, and this damaged the ability of the business development team to create growth.
We also discovered that the R&D team was dysfunctional. They were isolated from the rest of the business, including the strategy team. On closer examination, almost all customer-facing units, including sales and marketing, were disconnected from R&D. The company’s R&D team was, therefore oblivious to the customer’s pain points and lacked useful ideas for development.
The solution involved re-networking the R&D team with the rest of the company. Moreover, the company’s bonus structure was adjusted so that it aligned with the success of the whole company, instead of the individual. The solution ultimately fell under the category of ‘common sense’, but the level and pervasive nature of the problem had not previously been tangible.
The power of Network Centrality® lies within the diagnostics. We give organizations a visual representation of the prevalent problems they may have, helping them turn something intangible into a measurable outcome.
A lot of organizations have used the silo approach very effectively, especially large conglomerates. They are accustomed to encouraging interdepartmental competition for funding and support. In today’s fast-paced world, however, technology allows for quicker communication so departments can easily access the same information, allowing them to come together as one point of contact to solve problems.
Cross-functional collaboration not only applies to organizational strategies. It also trickles down to the day-to-day functions, influencing decisions on how to approach a client, how to develop a product, or how to take specific actions. The key is to get everyone involved and working at the same speed. This type of collaboration will drive a one-team mentality.