Seeing the Invisible: The Hidden Processes in our Companies
 



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  Seeing the Invisible: The Hidden Processes in our Companies  
  By Dr. John C. Beck, Lee Kuan Yew School of Public Policy  
 

The best picture Human Resources (HR) has of how the organization works is often the hierarchy chart. This shows who reports to whom and who works in which function. A simple hierarchy chart of a small department is shown in Figure 1.

 

Figure 1. Simple hierarchy chart of small department.

In this organization chart, two people are connected by a green line if they have a reporting relationship. We see that Andre is the boss. He has two direct reports, Diane and Heather, who each have a small staff. For a small department, this is a tall hierarchy - it has four levels. But does this reveal how the organization really works? What happens in the white space on the organization chart? How does work really get done? Who do people go to for advice? Who are the local experts - or “go to” people? Even though important information is missing from the organization chart, it is often one of the few key documents used when plans are made to restructure an organization.

As a management consultant, I can’t tell you how many times I have seen the following situation:

A company re-structures, eliminating some jobs, and then in six months, management wonders why things are not much better - and why, in some cases, things are much worse!

Often, the problem is that management used the wrong map in guiding them through the restructuring. They used the organization chart to decide which layers to remove, but the organization chart is an incomplete map of the company. In the knowledge-based economy of the 21st century, companies no longer function as simply as the organization chart implies. With cross-functional project teams, performing complex business processes, the organization chart is to the real workflow of the company as a first grade picture is to an adult portrait. You may be able to match the two, but many details are missing and much has changed.

Figure 2 shows the actual work flow of this small department. Two people are connected by a purple line if they exchange data, information and/or knowledge to get their jobs done. These are the actual internal work ties that support the business function(s) that the department performs.


Figure 2. Actual workflow of small department.

This is the emergent workflow in the department - this how things really get done. We see that the actual work relationships in the department are different from the formal reporting relationships. This is true in most departments - the more a work group depends on knowledge processing, external conditions and innovation, the more likely it will adapt to those constraints and away from the original prescribed structure. Are we beginning to see why using Figure 1 to guide us through restructuring may not be a good idea? Yet, most HR departments and management teams do not have these alternate maps (like Figure 2) of the organization, so they proceed with what they have.

Using the organization chart in Figure 1, management looks at the employment costs and job descriptions of each box on the chart. The unnecessary boxes are determined by task requirements/overlaps and cost, and are eliminated from the organization. The new “flatter” organization now looks like Figure 3. Management has eliminated two jobs and removed one level out of the hierarchy. The budget will look better with the elimination of these two “high-seniority, high-cost” employees. Good things are expected from this leaner organization.


Figure 3. Flatter organization.

The restructuring task force did not take into account the actual work flows, the tacit knowledge exchanges, and the advice network when changing the departmental structure. When looking at the the formal organization chart, everything looks fine - a flatter, leaner organization. Yet, when looking at the established work relationships and knowledge exchanges, we see a problem! Two of the key intermediaries in how things get done are now gone. Figure 4 shows us the obvious gap.

Figure 4. Gap in work relationships and knowledge exchanges.

Of course, since management does not have this map of how things really work, they will not be aware of their error until the fragmented workflow fails and starts to affect other connected processes. They do not have this organizational x-ray like we do. Without this alternate picture of the organization, they will have a hard time figuring out what went wrong. They will be quite defensive. After creating a more “lean and mean” organization, they will look for the cause of the problem outside of the restructuring process. They may even blame the remaining employees for not working hard enough.

Heather and Diane, the two departmental supervisors, will have to collaborate to figure out how to reconnect the workflow. When the two supervisors do figure out how to “cross the chasm,” the solution will not be reflected on the new organization chart! Again, the real workflow will be hidden from management and from any future restructuring efforts.

How do HR departments figure out the real workflows and key relationships in an organization? Many are starting to use organizational network analysis (ONA), a business form of the more academic methodology of social network analysis (SNA). Network analysis reveals what happens in the white space in the organization chart - it maps out important information flows and knowledge exchanges. Organizational network analysis goes beyond looking at just the human capital (what everyone knows) in the organization, to revealing the social capital (how information flows and knowledge is shared) in the organization - the key connections in the company.

Human Resources used to feel a sense of accomplishment when an employee was successfully hired. In the 21st century, the goal posts are extended. Now the employee has to be hired and wired - HR has to know, and understand, how the organization is really connected (wired). Modern HR will rely on this knowledge in order to be successful - the organization chart and the information/work/knowledge flow maps will be needed for effective decision-making.

 

About the Author
Valdis Krebs is the founder and chief scientist, at orgnet.com. He is a management consultant, researcher, trainer, author, and the developer of InFlow software for social and organizational network analysis (SNA/ONA). InFlow maps and measures knowledge exchange, information flow, emergent communities, networks of alliances and other connections within and between organizations and communities. Since 1987, Krebs has participated in almost 500 SNA/ONA projects. Clients such as IBM, TRW, Google, Vodafone, Nokia, Northrop Grumman, Lockheed-Martin, Raytheon, Boeing, various government offices, and hundreds of independent consultants use his software and services to map and measure networks, flows, and relationships in organizations, communities, and other complex human systems. He can be reached at www.orgnet.com.

 
 
 
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