‘I cannot understand why when we make a decision in this committee, it seems so difficult to implement it – if it gets implemented at all.’ ‘Every morning I wake up wondering why everything is so difficult, why it takes such a lot to get things moving in this company.’ How many times have we heard people say that, or said it ourselves, or something very similar?
Why is everything so difficult? After 25 years teaching organizational behaviour to students taking courses in executive management and working with premier oil, banking and telecommunications companies, I believe the reason is to be found in their level of “corporate health”. I have become convinced that a company, just like a person, can become sick.
What does “corporate health” depend on? It depends on two real variables:
• The “clarity of the power structure”.
I don’t mean just the formal structure or the management organisational tree. I mean an awareness of the environment of competition or responsibility, as it affects every individual. We are talking about a “management model” that lets you know who takes the decisions; at which level they are taken; the competition environment of each unit; and the speed with which decisions are taken as a consequence of this clarity.
• Identification with the company project. This means knowing to what extent the management team and the organisation is identified within the company vision, its brand, its values and its operating principles or ethical system. It implies an awareness of the level to which the strategy is shared by management units and middle management. It covers knowing whether the decision-making system operates in the light of these premises or if it responds to other variables (personal, situational, external, etc).
Using these two keys or constants as the corporate health framework, four types of company can be seen:
• Fragmented companies: those in which the power structure is blurred and staff don’t identify with the company project as a whole, but with the goals of each of its components; companies where departments operate in isolation and are thus unable to share resources, objectives, customers and so on, and where power is delegated to each individual section.
• Autocratic companies: those where all the power is concentrated in one person and their circle, so that important decisions as well as those concerned with micro-management are taken by a small number of people. In reality, no shared project exists, just loyalty to whoever holds power, and when dissent arises it is solved by getting rid of whoever is battling for said power.
• Companies with potential: those which are able to maintain enthusiasm for an embryonic project on which everybody in the company is working. The problems facing these companies are usually concerned with growth, raising the professional level of the staff, and hence power sharing or a definition of a management model which goes further than the founder. Companies like this are in danger of splitting up if they hold different visions of the future.
• Aligned companies: those which are familiar with their “management model”, which share and express the company vision, brand, values and principles.
I believe this breakdown (which I have dubbed the “Corporate Health Table”) may illuminate the reasons why things are so difficult, according to which quadrant the company falls into. But it might help to initiate the measures needed to improve the health of the company via two simple courses of action – a move in the direction of the power clarification route or that of identification with the company project. I will have more to say about that in the next issue of Dialogue.
Alberto Andreu is corporate reputation, institutional relations and social innovation director, Telefónica, and professor of organizational behaviour at IE Business School