21 November 2016

Why Hierarchies impede many Companies

Many of you know this, you start to work in a new company and you want to show that you are worth every penny but after a short time you realize that the hierarchical structures take the wind out of your sails. For example a simple change of an ineffective business process can take up to three months or even longer, because several meetings are needed, as everyone has to have his or her voice to this particular topic even though it doesn’t impact their area. These changes are usually done within a week in a young, dynamic Start-up. One can observe the inefficiency to change in large companies or in companies where the strong hierarchy is historically grown. Basically every company needs some sort of business process hierarchy and they are important for a successful company. But if rigid structures lead to the fact that companies lose market shares and the innovation is close to zero then this is very regrettable and these companies need to change this.

This is exactly the reason why in the last years the trend came up to learn from young, dynamic Start-up companies. Large companies from the Finance and Insurance industry invest in so called Boot Camps or they run Hackathons, because they have realized that this is a successful way to inspire the internal capacity for innovation. Additionally there are more and more companies that bring whole departments on a new level in implementing agile working methods. As an example the regional Heads of HR at the German train company Deutsche Bahn have done a tremendous hierarchical clean up and on top they have removed their own Chief positions. To demonstrate this to a larger audience Dr. Matthias Glaub presented the approaches and outcomes of this change during the Agile HR Conference 2016 and on the biggest HR fair in Germany Zukunft Personal. It makes clear that these changes are possible and that they are successful, even in the most hierarchical companies. All it needs is trust from the Top Level Management and the realization that it needs new Management approaches to reach a new level of working together.

Whether it’s called Agile or Scrum or a similar method, important is the Mindset of everyone so you can achieve a positive change and outcome. If it is possible to implement a hierarchical free working method within your company you have to find out if you think these approaches sound good to you. It is definitely worth to read more about it, since this approach is more commonly used in the Anglo-Saxon countries. You can find a lot of information online, e.g. when you read about the Agile Model of HR.

In our opinion the implementation of hierarchical free working methods is going to grow during the next years. Reasons for that are the rapid changes within our working environments, especially due to the increasing Digitization and Business Transformation. Many companies gradually realize that they have to adapt faster so they are not replaced by young, dynamic Start-ups. This will only work if companies learn from these Start-ups and begin to change their internal, inefficient processes. This is the way to free these companies from the hierarchical impediment and to finally become innovative again.

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