Silos Are the Ultimate Business Killer

One of the most critical things to business success is structure. People naturally need structure in order to do their jobs effectively; clarity in expectations, strategy, performance standards, workplace culture norms, etc… It’s a delicate balance between having too much and too little structure in a growing business. This is even more important in small businesses that grow beyond the founding team, and initial group of hires. When an organization reaches between the size of 25-50 employees is when leaders start thinking about organizational structure.

Let’s Think About This…

Bear with me and try and follow my logic. You’re a CEO of a 25-employee tech company and you just received $5 million in funding. You’re now tasked with doubling your headcount during the next 6-9 months. You need to hire more software developers, salespeople and support staff (e.g. HR, Marketing, Finance and Operations). You now need to somehow put pen to paper and figure out your go-forward organizational structure — short-term and long-term. After all, how else will you figure out and identify what roles you need to recruit for — job level, reporting structure, etc… Ultimately, you’re creating departments — another way of putting this is you are creating silos.

This is not a bad thing… unless…

These departments and silos end up operating independently of one another. Imagine in 9 months you have doubled your headcount to 50 employees, and you have “leads” in each department. They’re building infrastructure in their respective groups, creating and implementing tools, processes and structure so that you can scale, be efficient and effective and generate positive results.

So What’s the Problem?

Imagine that these newly created department/silos are starting to be effective. They’re producing but they’re not talking to each other? Let’s look at a simple example. The Finance team decides that the company has a cash flow problem and decides to put more spending controls in place as one way of solving this problem. But they forget to tell HR because this will also impact how fast the organization will recruit. They also forget to tell Sales and Marketing as spending on their respective business will also take a hit. Ooops! This is a real problem that leaders need to stay on top of from the get-go. It’s so easy for silos to create more problems than they solve, and it’s the ultimate business killer, particularly for smaller companies that are growing fast.

How Do You Fix This?

It starts at the top.

  1. You Need to Care. If you lead HR you need to be accountable for organizational results. The work you do has an impact across the entire organization so if your success is dependent on the success of the company you will automatically start giving a shit about sales, marketing, engineering, etc…
  2. Communicate constantly. Face-to-face, on Slack, wherever… Team Leads need to be constantly communicating to ensure the business is progressing forward cohesively.
  3. Awareness. Leads need to be aware that the decisions you make may impact other areas. If you think they will then say something. Would you rather take a few extra steps to ensure you’re not creating a monstrous problem, or deal with an avoidable cluster fuck down the road?
  4. Cross-Functional Work. This is extremely important. Teams need to be working across the organization with team members from other teams. In my case, when I do employee engagement work I ALWAYS include employees from other departments to help me with implementation. Why? This allows me to have a broader perspective on the organization through the eyes of others, and the final product is always better than if HR does it alone.

Organizations are constantly tasked with difficult decisions, and they each always have pros and cons. While a decision may make sense for a silo it could be catastrophic for the organization. If you avoid the easy trap of forgetting to work cross-functionally you will encounter many problems with your business. It starts at the top with business unit leads — you need to care about the entire organization and understand that your decisions need to respect and take into account other silos. Ignore this and you will fail.

Submit a comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.