Innovation Junkies Podcast

The Three “Who” Questions of Organizational Structure

The Jeffs talk about best practices of organizational structure. They discuss the importance of having a clearly defined reporting hierarchy, not forcing high performers into unqualified or ill-fitting leadership roles, & what it means to be empowered vs. autonomous.

Jeff Standridge (Intro):
Are you ready to change the trajectory of your business and see massive improvements? Each week, we’ll share strategies and practices to generate sustained results and long-lasting success in your organization. Welcome to the Innovation Junkies Podcast.

Jeff Standridge:
Hey, guys. Welcome to another episode of the Innovation Junkies Podcast. I’m Jeff Standridge.

Jeff Amerine:
Hey, this is Jeff Amerine.

Jeff Standridge:
Hey, guy. What’s up?

Jeff Amerine:
I’m just glad to be here and I’m really glad you wore that shirt today.

Jeff Standridge:
Why’s that?

Jeff Amerine:
That’s Razorback red, right?

Jeff Standridge:
That is not Razorback red. It’s also not pink. Although, I have no problem wearing pink. My younger daughter one day looked at me when I had a pink shirt on and she said, “You know, dad…” I mean, she was in elementary school. She said, “You know dad, real men wear pink.”

Jeff Amerine:
Exactly.

Jeff Standridge:
And I would correct you today and say this is not pink. It is salmon.

Jeff Amerine:
That’s river salmon, right?

Jeff Standridge:
Right, it’s river salmon. It’s not farm-caught salmon or farm-raised salmon. It’s wild-caught salmon.

Jeff Amerine:
I gotcha. I gotcha. Very good.

Jeff Standridge:
Speaking of wild-caught salmon, well, speaking of wild-caught salmon, I’m going to eat some of that soon because I’m going to be up in Alaska.

Jeff Amerine:
Oh, man. You’re lucky. You are lucky.

Jeff Standridge:
Yeah. Yeah.

Jeff Amerine:
Well, salmon are pretty organized. They always know how to swim upstream at the right time.

Jeff Standridge:
Great segue.

Jeff Amerine:
So that segues to this episode.

Jeff Standridge:
Yeah, we’re talking about… This is our last episode as we talk about these concepts around and best practices around organizational effectiveness. And so our last one today is about the organizational structure, and I call it “the three ‘who’ questions of an organization”. So let’s talk about those. The first of which is organizations can’t operate effectively unless everyone knows who reports to whom.

Jeff Amerine:
Yeah. I mean, it’s classic. And to think about that in terms of large organizations, a lot of times where you get that reporting conflict is, as an example, in a large organization that uses a matrix structure where you’ve got, say, engineers that all report to an engineering manager, but they’re all assigned to projects. Having that clarity around who reports to who and under what circumstances can be a challenge, but it is really important for there to be an understanding.

Jeff Standridge:
Yeah, no, you’re right. The dreaded dotted line, right?

Jeff Amerine:
Exactly.

Jeff Standridge:
Yeah. We used to talk in terms of, “Well, I have a thick dark line to so-and-so and I have a dotted line to these other eight people.”

Jeff Amerine:
Exactly.

Jeff Standridge:
It’s kind of crazy. And I think the other thing there is… And this happens both in large businesses and it happens in small businesses as well. When we have a, well, I call them a technical or a tactical performer, but they really struggle at leadership. And so we create these carve outs to try to make the people under them happy, and it just confuses things and no one really understands who reports to whom and who’s the right decision maker.

Jeff Amerine:
Yeah, it’s true. I mean, to the same point, a lot of times, you ruin really good individual performers, individual technical leaders, individual subject matter experts by assuming since they’re fantastic at that level, they’ll instantly be good at leadership or at managing, and it’s not often the case. Without…

Jeff Standridge:
In many instances, yeah. Go ahead.

Jeff Amerine:
Without proper education, training or an assessment of whether or not they even want to do that, you can ruin them sometimes for sure.

Jeff Standridge:
In many instances, in highly technical professions, leadership and technical proficiency are antithetical to one another.

Jeff Amerine:
Yeah. No doubt.

Jeff Standridge:
And so one of the things that I’ve seen done very successfully is make it okay for someone to grow their career as an individual contributor or a technical expert. Call them a technical executive. Call them an engineering executive. Call them what you want to call them, but give them the opportunity and the same clout at the table, if you will, the same seat at the table with senior executives, but as an expert in the organization, and just be real clear about what they make decisions about and where they spend the most of their time, which is influencing decisions.

Jeff Amerine:
Yeah, that’s a definite best practice. And in fact, even in large organizations, you can see that to an extreme. At times, a chief technology officer won’t have many or even any direct reports. He’s more of your senior technical person that’s intended to provide vision, advice and guidance, and it’s a smart thing to do. And it gets down again to that idea of people understanding where they stand, what they’re supposed to do and who they report to.

Jeff Standridge:
That’s right, who reports to whom. Particularly in a growing business where you’re adding people all the time and you’re having to create, call them divisions or departments, every time you make those changes, you’ve got to republish that org chart, if you will, and make sure that everyone in the organization understands it.

Jeff Amerine:
Yeah, and give you an example as we segue to this next point here. One thing I learned early on in my career is if more than one person is responsible for a particular thing, it’s the same as nobody being responsible for that particular thing. So there really does need to be clarity about what you’re supposed to do and what you’re responsible for. Talk a little bit more about best practice in that area.

Jeff Standridge:
That’s right. Who’s responsible for what. That’s the second who that we ask, not just where there could be overlapping boundaries. That’s one area where I’m not sure if Billy’s responsible for that, or if Sally’s responsible for that. Well, get clarity, but also within a particular area where it’s clear what I have responsibility for. The next question then is how much am I responsible for? So whether it’s spending guidelines or particular budgetary levels that I have authority over, there’s a difference in autonomy and empowerment. Many times, we like to use the word autonomous when we’re really talking about empowered. Autonomy is the ability to make decisions independent of anyone else or independent of a framework. Empowerment is the ability to make decisions within a set of guidelines or within a framework. So I am empowered to make budgetary decisions or financial decisions up to $10,000, up to $25,000, up to a hundred-thousand dollars depending on the organization, but I’m not autonomous to make decisions, financial decisions outside of those boundaries. Does that make sense?

Jeff Amerine:
Yeah, it does. It does. And we may have talked about this in an earlier episode, but we always called that the empowerment triangle, where you have harmony between accountability, responsibility and authority. And the other side of that is I’ve been in large organizations whose initials were Westinghouse many years ago and we called it the Westinghouse victim syndrome. This is back before it became Northrop. And part of that was we had very senior people responsible for potentially millions and millions of dollars that didn’t have the authority to buy pencils. Everything required an approval and they felt… It wasn’t that they were looking… It wasn’t that they were looking for autonomy. They were looking for accountability and responsibility that had an equal amount of authority so they could actually act on the things they should have been able to act on.

Jeff Standridge:
Yeah. And to take that one step further, I’ve seen organizations, what I would definitely call a best practice, where they’ve said, “You have the authority to resolve a customer issue up to blank.” And even a frontline employee say, “Hey, look,” call it a retail business, “you know what? If you can resolve it to the customer’s satisfaction for less than a hundred bucks, you do so.” Any above that, you go to your next line leader.” Or maybe a VP in a company saying, “Hey, look,” and maybe it’s a B2B type of company, “if you can resolve a customer issue within $10,000, then you have the authority and the empowerment to do so.”

Jeff Amerine:
And it’s so important. The next thing is there’s inevitably going to occasionally be fuzzy lines or overlap or conflict in organizations. It happens. Somebody once said, “If there’s no conflict, there’s probably not a lot happening that’s good in that organization.” But the question is the third question. When you get to that and there is some sort of a conflict, who breaks the tie? What’s the best practice in that regard?

Jeff Standridge:
The best practice there goes back to culture, which we’ve talked about a lot. Is number one, to have a culture where people will sit down together and resolve those kinds of things amicably, but you can’t always depend on that in a particular situation. Hopefully, 90, 95% of the time, that takes place. But ultimately, you have to have a decision. Does it roll all the way up to the CEO, God forbid? Hopefully, every tie doesn’t. Hopefully, there’s someone in the organization that you both report to that’s below the level of the CEO who breaks the tie. Or maybe there’s some situations where it is peer to peer and you just articulate ahead of time how a tie’s going to be broken. But knowing, anticipating that on the front end, there’s no substitute for a great collaborative culture, but you got to decide who’s going to break the tie. So who reports to whom? Who’s responsible for what? And then God forbid, when it happens, who breaks the tie?

Jeff Amerine:
Great stuff. That’ll keep you on the straight and narrow and will make the organization work well, if you have a structure and clear understanding on these three points.

Jeff Standridge:
That’s right. It’s been another episode of the Innovation Junkies Podcast. Look forward to talking to you next time.

Jeff Amerine:
Sounds great. See you.

Jeff Amerine (Outro):
Feedback from listeners like you helps us create outstanding content. So if you like this episode, be sure to rate us or leave a review. Also, don’t forget to subscribe to get the latest growth in innovation strategies. Thanks for tuning in to The Innovation Junkies Podcast.

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