Top-Down Management Structures Are Crumbling– How Will You Adapt?

Originally published on CEO.com.

Not long ago, employees succeeded in the workplace by producing consistent, high-quality work as specifically directed by their managers. Once promoted into middle management, however, their measure of success became the productivity of their team, and their priorities shifted from completing the work to setting expectations and processes for others to follow.

This top-down structure inherited from the Industrial Revolution is rapidly changing. Only 38 percent of companies self-identify as “functionally organized,” according to anew survey from Deloitte. In an attempt to reorganize, many companies are adopting flatter, more autonomous structures that operate under empowerment and alignment with greater agility and velocity.

Today, your smartest, most productive people will create the most value by both generating and executing on their ideas. As this new breed of employee permeates the workforce, it demands a different approach to management to drive competitiveness and company success.

Defining Autonomous Management

Moving away from top-down leadership styles isn’t easy, and unlocking potential innovation while giving directional guidance and achieving business impact requires a deep understanding of your employees. Changing culture is tremendously hard, and the process can go wrong in myriad ways.

For example, unengaged employees perform worse in an environment that requires them to define expectation on their own. Also, when employees are expected to sort out their jobs with little to no guidance from leadership, they’re working in a dysfunctional environment — not an autonomous one.

In a productive environment, autonomous employees have a lot of freedom, but it is within the right set of guidelines provided by leadership that will ensure business impact and maintain strategy alignment.

The Strategy to Empower Employees

As a leader, you need to drive meaningful, continuous change — keeping in mind the risks. A failed attempt to empower employees through autonomy could disrupt your company from within.

Tony Hsieh experienced internal discord moving Zappos to an employee-empowered holacracy business model. Rather than treat the structural change as a journey, the company went from one end of the spectrum to the other very quickly. The sudden shift rattled employees, and 29 percent of Zappos staff turned over. This year, for the first time since 2008, the company did not make Fortune’s list of Best Companies to Work For.

To prevent similar results in your own organization, choose portions of your company to drive this new approach. These “lighthouse teams” will guide those behind them until the initiative has spread across the entire company. This gradual approach will make sure whatever organizational structure you arrive at is the right one for your team and won’t kill your business.

To help your business transition into a more autonomous leadership structure, keep the following tips in mind:

1. Identify your ‘autonomy’ leaders.

Review your workforce, and bucket employees into two groups: those who are eager to be autonomous and those who need different levels of guidance. As Zappos saw firsthand, abandoning strong contributors who need structure during a transitional period can be a costly mistake.

From this pool of top talent, identify your autonomy leaders — those who come to work, respect their own time, and want to enact positive change. Your autonomy leaders view their success through the lens of what they create, not how well they follow marching orders. They need to be comfortable pushing back on their managers in a logical, articulate way, and they should come from a place of achieving impact. One-on-ones, team huddles, and project performance reviews help you identify how people perform when given the freedom to achieve their own deadlines.

2. Give these employees permission to exercise their empowerment.

You need to begin to transfer your influence as a leader over to these individuals so they can begin to drive change themselves. Start giving them the authority to make decisions, all the while ensuring they have the information and guidance they need to make sound ones.

Create a forum where senior leaders can hear, guide, and empower these select few to take on big ideas. Then, recognize them in public — in front of their peers — for specific accomplishments. In doing so, you are communicating to others that you’re confident your culture leaders will create change and that you’re backing them up with your authority.

Eventually, this group of leaders will begin to see where they can provide value and guide themselves more independently. By starting with a core group, you’ll create a chain reaction of empowerment that reverberates across the company.

3. Make sure to set the right boundaries.

WordPress hosts about 20 percent of the world’s websites on its platform, and this volume is handled by only a couple hundred employees at Automattic, who mostly work remotely. Instead of following orders, contributors to this commonwealth organization are empowered to do whatever they believe is right — as long as their actions align with the company’s overarching goals.

Some “culture rules” are in place for a reason, and you’re paying people to produce high-quality work. This makes communication within the community key to aligning everyone’s interests and leveraging employee resources more efficiently.

At Lifion, our culture rules (the Lifion Credo) guide the way we work. We live out this credo by allowing employees to run as relatively separate small groups, only setting standards for tasks that are a must (e.g., quality, customer focus, dependency management). Successful groups continue to gain more autonomy and have power over their areas of focus and ways of working, while groups that are less successful get less autonomy and are sometimes reconfigured to get them to a more successful place.

Like Automattic, our groups can make their own decisions and implement their own solutions, as long as our Credo is at the foundation and they’re aligned with our overall strategy. Rawn Shah (of Adobe and Ethos VO) and Davide Casali (of Automattic) dub this kind of environment a “wirearchy” — a dynamic two-way flow of power and authority, based on knowledge, trust, credibility, and a focus on results, enabled by interconnected people and technology.”

Setting Expectations for Freedom

While it would be nice if everyone handled freedom the same way, that’s not a realistic expectation. After switching to an autonomous structure, Buffer learned the hard way that freedom without leadership can be harmful. Co-founder and COO Leo Widrich took to the company blog to speak on the topic.

“People were easily lost, especially those who had just joined Buffer,” wrote Widrich. “More experienced people often didn’t quite see a place to help out and share ideas around which direction a project could take. The way I would describe it is that the amount of freedom people had, with absolutely no guidance, expectations, or accountability, was pretty overwhelming.”

Your business still needs to move forward. The tasks themselves aren’t changing — the way they’re being completed is. Even empowered employees need direction and motivation. A sense of job security still comes from knowing the system you’re supporting is functional.

Some people may not be a fit for the environment you’re changing to, and that’s OK. Set realistic expectations upfront, and continuously reiterate them as part of your new culture. Growing pains may be inevitable, but taking these three steps will help you empower employees to drive your company into the future.

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