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The Danger of Silos in Your Business

2010 | Nov 24 in Business Development , Home Page News , Management , Leadership

By E-Myth Business Coach,

Organization Chart - SilosIf your business is big enough to have managers and possibly even “departments” then you are probably familiar with the phenomenon of a silo structure. When you have reached the point in your business growth that you have hired managers and the reporting structure has become identifiably vertical in each area, or department, then you have a silo model. While this is not a bad thing in and of itself — in fact, it is often an intentional growth model — there is a danger of creating rigid and isolated “silos” that can hamper growth, create communication problems, and demoralize employees.

Engaging Your Team

Whether you are just starting your business, or have been around for a while already, the last thing you want is a dysfunctional collection of employees busily working away at their little piece of the “big picture,” yet never seeing the big picture! In his book, The 8'th Habit:From Effectiveness to Greatness, Stephen Covey cites a poll of 23,000 employees across a number of industries. He notes that, among other findings, only 37 percent of the employees said they have a clear understanding of what their company was trying to achieve and why. Could this describe your business?

This phenomenon exhibits itself in a number of ways such as:

  • “This is MY department” Syndrome – where managers and their staff become resistant to input or feedback from those outside of their department.
  • “That’s not my job” mindset – a myopic focus on one’s job description at the exclusion of any broader participation or expectations.
  • “Information Isolation” – the unintentional isolating of information and data so that critical elements are left out of the flow of knowledge in a business.

While it is fairly obvious that an effective team would require that all the participants be wholly on board and engaged with the ultimate goal or objective of the team, it is also fairly obvious that this is not always the case. Part of the problem is due to the unintentional stultifying (or numbing) effect that silos can have in a business. The business owner works hard to create and direct a management team to carry out the goals of the company. Management works hard to maintain order, structure, and an efficient flow of information and a chain-of-command between themselves and the individual employees. Individual employees work hard to focus on their specific tasks and duties while working within the structure and silos of management and information flow. And somewhere the vision, the purpose, and the “team” gets lost.

Tear Down These Walls!

Silos are nothing more than the barriers that exist between departments within an organization, causing people who are supposed to be on the same team to work against one another.

— Patrick Lencioni, Silos, Politics, and Turf Wars

One of my clients came to a coaching meeting frustrated and somewhat distressed. She was at a loss as to what to do with her staff that seemed to function well on a purely tactical level. In other words, they did their jobs as assigned. But her frustration was that they did nothing more, were not truly functioning as a “team,” and seemed to have no sense of why they were there and what the company was striving to achieve. She attributed this to poor hiring decisions on her part.

We looked at her reporting structure, management style, etc. and determined — among other things — that while she had actually made good choices in her hiring decisions, she had created a culture and an environment that emphasized a high degree of self-management and task-oriented goals. The result was a corporate mind-set of “every man for himself.” While my client possessed a strong vision and a passion for the business, this had never been communicated or imparted to her staff. Their attitude was one of “as long as we hit our individual numbers in our department then it’s all good.” There was no incentive to think outside their immediate realm of impact or to consider where and how they each fit into the larger whole.

In most situations, silos rise up not because of what executives are doing purposefully but rather because of what they are failing to do: provide themselves and their employees with a compelling context for working together.

— Patrick Lencioni

Her solution was to completely restructure the management team and to implement, among other things, weekly Leadership Team meetings with her managers, weekly company-wide “huddles,” and one-on-one meetings every other week between managers and their staffs. In addition, she wrote out her vision for the company and shared this with everyone during a special company meeting and followed this up with printed copies distributed to the entire staff. While this in itself did not resolve all the issues in their culture, it was a significant and tangible start to taking down the silos in her business.

Real Change Begins in the “Heart”

To tear down silos, leaders must go beyond behaviors and address the contextual issues at the heart of the departmental separation and politics.”  

— Patrick Lencioni

Whether you are still building your business and are looking to avoid the dangers of organizational silos, or have an established business and want to do away with the restrictive aspects of the silo model, there are some fundamental steps that should be taken:

  1. Create a unified management team
  2. Foster communication and trust — both laterally and vertically
  3. Establish and communicate a common vision and purpose
  4. Engage, engage, engage

The real key to successfully building a business along these lines — or “retrofitting” an existing business — is strong leadership. This begins with the owner, but is also dependent on the management team, as well. Effective managers are good leaders, much as a good business leader is an effective manager. A strong leader will provide, among other things, clear direction and leadership by example.

While this is not something that can be accomplished in a day, the foundations can be established fairly quickly. And, ultimately, the result will be a business structure that accommodates the needs for effective reporting and management while fostering a culture informed by a unifying vision.

Share Your Story

Have you felt silos emerge in your business? How have you overcome them? Post a comment and tell us about it.

Comments

  1. .Dean A. says:

    How appropriate. I am sure that e-myth have a cctv installed in our offices.

    I totally agree. We have already begun the process and it doesn't happen overnight, but you must keep going in the right direction.

    Share the vision

    Live the vision

    Empower and engage your employees

    Submitted Nov 24, 2010 11:35 AM

  2. .lindsay m. says:

    In the military they have a process called orders which has evolved over 300 years to tackle these sort of problems in a huge organisation. This process includes a section on situation awareness and boundaries.

    Submitted Nov 24, 2010 12:43 PM

  3. .Shaun L. says:

    What are prestigious business schools teaching? It has amazed me for years that most managers just don't get it. I wrote a programme over 30 years ago that I called Matching Agendas, The Simple Art of Caring that addresses this exact issue. I've used it in my own businesses to great effect but never had the time to drive it on a wider scale. In 2009 I set up a website and updated some of the manuals. Your article makes think I should. MatchingAgendas.com

    Submitted Nov 25, 2010 2:15 AM

  4. .Josh P. says:

    For me, killing silos is always a good idea.  I think it starts with having a really good corporate mission statement.  One that is seven to ten words long, can be answered with a yes or no and is integrated into everything a business does.  This helps all keep their eye on the ball.

    Josh Patrick

    www.stage2planning.com

    Submitted Nov 30, 2010 9:56 AM

  5. .Keith L. says:

    And don't forget about your data silos!  Silos can exist where you keep your company's contact, sales, orders, inventory, and even customer communication.  If this data is scattered and only accessible by individual employees or departments it is very hard to get a clear picture of the whole business.

    Our whole business model is about designing software systems that centralize and shared data across the organization so that individuals can do their jobs in a very systematic way and management can see the whole related picture.

    http://www.productivecomputing.com

    Submitted Jan 6, 2011 11:34 AM


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