How close to the edge is your company?
Today’s rapidly changing business environment calls into question the effectiveness of the traditional command-and-control management structure, a vestige of the Industrial Age that focuses on a strict hierarchy of concentrated decision-making and interactions, with tightly controlled access to information.
In the Information Age, a more agile management structure is becoming more common. So-called ‘edge organizations’ are structured to empower employees who operate at their edges, i.e. where they directly interface with clients and the external world. They need to be especially adaptable to dynamic situations.
The sweet spot
How near to the edge an organization is operating can be assessed in terms of the following three attributes:
- Allocation of decision rights: The freedom and authority to make decisions at all levels.
- Patterns of interaction: The freedom to interact with whoever in the organization.
- Distribution of information: The free flow of information to those that need it.
Being at the edge requires the empowerment of unconstrained employees. For most companies, the preference is to operate in a ‘sweet spot’ for each of the three aforementioned dimensions, one that is compatible with the company’s business, organizational culture and risk management policy.
The unconstrained allocation of decision rights, for example, represents chaos and risk. In any company, there needs to be clarity in the decision-making process and in each individual’s appropriate level of responsibility. Patterns of interaction, meanwhile, represent a spectrum from ‘everyone is in it for themselves’ to ‘we are all in this together,’ but the aim is a collegial atmosphere where employees will share ideas, approaches and decisions freely. Finally, transparency regarding access to information can do much good, but some details need to be kept ‘confidential,’ with limited circulation, given the need to respect privacy and security.
The ‘sweet spot’ for a knowledge-based consulting engineering firm is likely different to that of, say, a traditional manufacturer.
There needs to be clarity in the decision-making process.
A real-world assessment
An edge organization assessment was undertaken for an employee-owned international consulting engineering firm, a couple of years after it had experienced a decade of strong growth and organizational change. The assessment saw 16 senior practitioners participate, rating the firm on each of the three edge organization dimensions with a numerical score from 1 (tightly constrained/controlled) to 5 (unconstrained/uncontrolled). They also rated the company at four levels: (a) overall organization, (b) national/regional corporate, (c) local corporate and (d) project. Their scores for each of these four levels were then averaged for each of the three dimensions (see Table 1).
The scores help indicate the extent (a) to which the company has developed into an edge organization and (b) to which employees feel empowered. Noticeably, they increase moving from the higher corporate level to the lower project level, in all three dimensions. This is to be expected in a project-driven work environment where senior members interface with clients and therefore need to be empowered to execute work effectively.
The lowest scores, for the allocation of decision rights at the higher and local corporate levels, may reflect a move toward centralizing certain decision-making rights to better manage risk as the company grew. Overall, the participants considered the company to be a moderate to strong edge organization—and their comments tell a more complete story than the average scores:
“In terms of the organization overall, I am talking about the decision-making rights given to junior through intermediate to senior staff, who have the skills and experience to make decisions and provide opinions commensurate with their level and know when they should/are expected to consult with others before making certain decisions. This freedom to decide should not be confused with the implementation of certain processes and tools and the request/expectation that staff at all levels will use them and follow procedures; these are intended to bring some consistency to how we do our work as a global company with global clients, manage our risk and facilitate global collaboration.”
“Although the company actively advocates and encourages all employees to directly interact with anyone in the organization, the individual employee may be hesitant to do so because of perceived hierarchical expectations in a professional firm, especially as the firm grows substantially. It may be viewed that senior management does not have the time for interactions at all levels. Following a chain (hierarchy) of command may be expected (i.e. not prudent to do an ‘end run’ around one’s immediate supervisor unless prior attempts to resolve an issue with the supervisor have not been successful).”
“Although at times it can appear that information is more tightly controlled at the organization and higher corporate levels, there have been marked improvements in the dissemination of information and efforts to improve transparency through more effective and direct communication. Sometimes, the pace of our growth results in quick adoption of processes (sometimes poorly tested) or less timely communication. The intent is genuine.”
The participants also indicated if they thought the performance of the company over the past year had improved (assigned a value of +1), deteriorated (assigned a value of -1) or remained unchanged (assigned a value of 0), with respect to each of the three dimensions, at each of the four organizational levels. At the participant level, the performance values for the four organizational levels of each dimension were totalled and normalized by dividing by four (i.e. the number of aspects rated) to provide a participant performance rating for each dimension.
The participants’ scores and performance ratings for each dimension were then presented graphically (see Figure 1). Each participant’s overall assessment of the company’s status as an edge organization was determined by combining and averaging their scores and performance ratings for all three dimensions at all four organizational levels.
The range in the data presented in Figure 1 reflects the diversity of the experiences and roles of the participants. The four of them who considered the performance of the company to be deteriorating, for example, were generally long-serving individuals who joined the organization when it was much smaller, with a culture of local decision-making, open and broad distribution of information and interactions with colleagues. Some of them had held senior management positions in the past, but were now in technical roles, so they may have sensed their decision-making ability, access to information and ability to interact with colleagues had become limited as the company had grown and centralized its management functions as part of its risk management strategy.
In contrast, the eight participants who considered the company to be improving its performance had been there for a shorter period. They were project-focused, with limited corporate management experience. Rather than feeling disenfranchised, they perceived the organization as trying to rationalize decision-making processes, encourage interactions and improve the distribution of information.
Two respondents scored the organization at 3 or less, suggesting a 50% or less feeling of empowerment, and considered its performance to be unchanged overall. These two were technical specialists who tend to function as sole practitioners. Consequently, their responses may have reflected a sense of isolation from and/or frustration with the broader functioning and development of the company.
In a project-driven work environment, those who interface with clients need to feel empowered.
The path of growth
As a consulting engineering firm grows, it tends to evolve from a small collective of senior practitioners at the edge to a more centralized form of management with standardized policies and procedures.
This evolution can result in a cultural change, with senior practitioners feeling a sense of disenfranchisement and being pulled back from the edge, as limitations are placed on the allocation of decision rights, patterns of interaction and distribution of information.
In the sample edge organization assessment presented here, the subject company’s ‘sweet spot’ represents moderate to strong employee empowerment, but with limited decision rights at the higher and local corporate levels. The assessment may help managers understand how the company is perceived by different generations of employees, with different histories, as the company continues to grow.
Bryan Leach is a retired Calgary-based engineer who has been designated P.Eng. in Alberta and C.Eng. in the U.K. and now focuses on helping organizations learn. He can be reached at email@example.com.
This article originally appeared in the July/August 2021 issue of Canadian Consulting Engineer.