How leadership requirements change in large organisations

As companies grow in size, the challenge of keeping everyone on the same page becomes ever greater. In the minds of many executives, the most natural solution seems to be an increased tendency toward top-down control.

A group of leaders at company headquarters can decide between themselves on the next set of projects to embark on, internal adjustments to be made, and plans for implementation. These insights are then communicated to the various middle managers within the company, who in turn set about turning them into a practical reality.

This set of ideas makes perfect sense in the abstract, but fails reliably when tested under real-world conditions.

Reasons for this failure are manifold. Such a decision-making structure ensures that initiatives are determined by those at the greatest distance from where they will actually be implemented. Meanwhile, the employees who face customers directly every day, and are in the best position to spur sensible innovation, have their hands tied and their assertiveness hobbled by directives from above.

Moreover, the top-down structure is slow to respond to queries and concerns because it functions as a bureaucracy. Management must pass messages to the next level higher, who must decide whether to pass them higher still; and by the time the response comes down to where it is needed, the ideal time for action has passed. Instant coordination becomes impossible in stratified communication networks, particularly those that span multiple time zones. Each layer of the system becomes its own informational bottleneck.

Before long, the workforce gets into the habit of waiting for instructions rather than engaging in constructive problem-solving of its own accord. It loses motivation and begins to self-identify as a group of passive functionaries, while those at the executive level find themselves preoccupied with minutiae that ought to have been settled many levels below them. And if an executive is replaced or falls ill, the work under them grinds to a halt until direction is re-established

A far better and more empowering method involves a decentralised command structure. The larger the organisation, the less the executive should need to get involved in the day-to-day affairs of the company. Staff at all levels should be encouraged to buy into the purpose, goals and values of the organisation – and trained to solve problems locally on their own initiative.

Managers and employees alike should understand the value of taking ownership of their own decisions as well as the company’s success as a whole. True teamwork, and the benefits that it creates, can only come from a feeling of shared purpose and a recognition that every member has a valuable set of responsibilities that they are tasked with performing.

The business world moves too quickly for multi-level vertical communication on small issues. Most strategy and workflow issues that can be settled locally, should be. Insights and adaptations can be shared most quickly by bypassing vertical bottlenecks and instead utilising open lines of horizontal communication between nodes of the network.

A collective sense of purpose and decentralised authority to solve problems means that organisational needs can be addressed instantly by the people best equipped to tackle them. Executive-level functions can therefore receive the attention they deserve, because the people at the top can be confident that the business is able to run itself without being micromanaged.

Embracing this decentralised structure can go against the instincts of many, as it requires maturity as well as faith in the abilities of people whom they may not know firsthand. But most of all it requires a willingness to adapt.

The phenomenon is present in other walks of life as well. As a child grows, the role of the parent must change as well. As children become more capable, parents who remain controlling will end up stunting the proper development of their kids’ abilities. When the same children come of age, they will be prepared to act and live independently only if the parent has allowed them to increase their autonomy over time.

The temptation to exert control is strong, and failure to do so will certainly lead to mistakes being made on occasion. But in order to learn from our mistakes, we must be allowed to make them. Responsibility leads to experience, which in turn brings expertise. In order to be successful in the world of business, rather than handcuffing our workforce, we must learn to set it free.