Are your organizational challenges unique?

?Large organizations have been facing increasingly complex challenges in the last thirty years. More and more often we have listened to a number of corporate leaders sharing their concerns about issues that hinder their organizational performance and their employees’ accountability and engagement.

A silo mentality, a reductionist approach where work is fragmented, a rigid structure, stultifying bureaucracy, an excess of systems and processes created only to increase control that end up paralyzing work, an outdated command & control management style that is still ubiquitous, and of course limiting mindsets… Does this ring any bells?

In the last 20 years we have worked with CEOs and leaders of many large organizations in different parts of the world, in different industries, and in different moments of their life cycle. The majority believe that their challenges are unique to them. Our experience has shown us that the issues are more common than believed. In an effort to add more value to our clients, we decided to go beyond the anecdotal stories from our clients, to find the root cause of the organizational problems, if any.?In order to gain a deeper understanding of the most common organizational challenges we decided to examine the other quantitative research available.

A very interesting insight emerged when we looked at the regional results of an organizational culture survey called Cultural Transformation Tools (CTT) by Barrett Values Centre, a survey that in Asterys we tend to use for measuring the main elements of the current culture and the desired culture within companies. We realized that the main challenges are always the same, across industry, across organizational dimension, across location.

In this survey, respondents – generally all the employees, managers, and leaders of an organization, or a sample of them – are asked to choose 10 values or behaviors that describe the current culture of the organization and 10 values or behaviors that describe the culture that they would like to experience in the future. The list of values from which respondents can choose includes both positive and potentially limiting values. Examples of the former are values such as accountability, teamwork, innovation, continuous improvement, ethics, and so on. Examples of the latter are bureaucracy, blame, internal competition, silo mentality, distrust, and many others. The share of the potentially limiting values among the total values chosen by respondents in a given company measures the organizational “entropy” or degree of dysfunction existing in the organization. We can refer to entropy also as the amount of energy that becomes dissipated rather than being used to achieve the company’s goals.

A cultural entropy of 10% or lower indicates a healthy organization, as a little bit of friction can be considered natural. An entropy between 11% and 20% reflects issues requiring cultural or structural adjustment. More than that and the issues are considered “significant” (between 21% and 30% entropy), “serious” (between 31% and 40% entropy), or “critical” (over 40% entropy) and require increasing cultural and structural transformation, leadership development, and coaching – and ultimately changes in the leadership.

Looking at the overall results of organizational entropy (with more than 1.000 assessments in 40 industries and 36 countries over a period of 5 years), we can notice that almost anywhere the level of entropy is worryingly high: almost half the organizations surveyed have levels of entropy above 21%.

Then our curiosity led us to examine which potentially limiting values lead to the different levels of entropy of the organizations. Not surprisingly, when looking at the top 10 values selected by respondents for level of entropy, we noticed that bureaucracy, hierarchy, control, short-term focus, silo mentality, blame, control, and information hoarding are increasingly present and influence how people work, collaborate, and achieve goals – thereby also influencing organizational performance and the ability to innovate and change.

Top 10 Current values in organizations by level of entropy. Source: Barrett Values Center. Data from 2,463 cultural values assessments in 77 countries

Let’s look at what those limiting values imply.

Bureaucracy can be a form of control. Too much bureaucracy can block creativity and entrepreneurial spirit, and may erode accountability and trust. Bureaucracy can lead to ineffectiveness.

Hierarchy can become potentially limiting when position dictates the quality and degree of relationships for all involved. Power and status can become the focal points.

Information hoarding happens when managers withhold information in an effort to maintain or gain power and status. When information is not shared freely, creativity and trust are completely lost.

Confusion may reflect the lack of clarity among employees about organizational direction, priorities, and responsibilities. It slows down performance and leads to non-optimal decisions.

Control may imply a lack of trust in others. Control can block innovation, creativity, accountability, and entrepreneurship. Control may sometimes be seen as a positive value only when it concerns financial matters.

Short-term focus leads to actions aimed at a short-term advantage, and is generally motivated by the need to provide shareholders with quarter-on-quarter financial gains and not by a higher organizational purpose. Short-term focus may lead to the exploitation of resources, unethical decisions, a decrease in social engagement and a lack of long-term sustainability.

Silo mentality may be a reflection of disconnection, lack of knowledge sharing, and hindered capability for achieving common goals and community. It generally hinders innovation and generates internal conflicts.

Long hours are often a by-product of short-term focus: in an effort to optimize and make the organization more and more efficient, people are exploited and their working time is expanded to unhealthy levels. Stress levels have been constantly increasing in the last twenty years and 66% of workers in Europe attribute their stress to excessive workload. The total cost of mental health disorders related to stress in Europe (both work and non-work related) is estimated to be 240 billion Euros per year, of which 57% or 136 billion Euros indicate lost productivity, including sick leave.[1]

Blame is about focusing on finding fault for mistakes and problems instead of learning from them. In a control-driven organization the overemphasis on finger-pointing causes people to avoid accountability and risk-taking.

Thus, no matter the company you work for, its dimension, its location… you have a high probability of working in a toxic environment that leaves you unable to express your full potential.

[1] Source: European Agency for Safety and Health at Work 2014-2015.