So what exactly are alternative management structures? Which companies are using them? And how can they benefit your business?
The organisational structure of your business is crucial in determining how efficient the company functions. I looked at whether communal working produces productivity but how about your business structure? Choosing the correct management structure for your organisation helps nurture continued growth, satisfied employees and higher returns for shareholders. By the same token, opting for the wrong time of management structure can result in ineffectual working practices, tension between staff and less profitability.
With prolific advances in technology and communication, today there is a much greater emphasis on flexible and remote working patterns. As telecommuting and flexibility gains prominence within many different industries, the door has been opened to alternative and flexible business structures.
What are alternative management structures?
Unlike traditional organisational structures, with alternative models, business owners and managers typically have much less control. In shifting the responsibility of tasks down the organisation, alternative structures offer much less control but increased flexibility.
Waving goodbye to a hierarchical system
As the Small Business Chronicle states, a traditional hierarchical company structure involves a centralised decision-making model. With everything decided centrally, little coordination is required and an efficient structure is in place. This type of system is effective in highly regulated and stable business environments.
For less predictable business environments, an alternative structure can prove advantageous as more flexibility in place can result in better performance.
The no management system
One alternative management process that has gained recognition in recent years is the no management system. On the surface a company without managers might sound like a completely disorganised farce. However, if this was the case, why is this unique corporate structure being implemented by companies of all sizes?
Case study: Valve Software
In April 2012, Valve Software, an American video game development company, released its handbook to the public. The handbook sparked a considerable amount of interest. Apart from the company offering free food and massage rooms, interest was generated due of the fact this large organisation of 300 employees, doesn't have any bosses or managers. Does this option offer a great way to promote communal working?
Talking to Bloomberg Businessweek, Valve's co-founder Gabe Newell, explains that during his time at Microsoft he was exposed to different organisation process models. Consequently Newell began thinking about different organisation structures.
As Valve's job was to create things, the “institutionalising” of procedures managers are good at, is not, according to Newell, necessarily a good thing.
“Our industry is in such technological, design, and artistic flux that we need somebody who can recognise that. It's pretty rare for someone to be in a lead role for two consecutive projects,” Newell told Businessweek.
Instead of having managers and bosses supervise proceedings, Valve exploits “group” or “individual” contribution skills. A group contributor will help others internally become more productive, thus sacrificing some of their own productivity. Instead of having sales and marketing agents in place, at Valve each developer is responsible for measuring and optimising customer satisfaction.
Newell admits that in order for the 'no management model' to work, you need to have the right people. Instead of looking for the most inexpensive employees, Newall jokes, the most experienced and expensive are likely to fit this corporate structure better.
Case study: Treehouse
Another company that actively embraces a no management model is Treehouse. Treehouse teaches people to build websites, apps, write code or start a business. Ryan Carson is the co-founder and CEO of Treehouse. In June 2013, Treehouse opted for a four-day working week and decided to remove all managers.
Admitting it was a bold move, Carson explains that Treehouse proposed the idea in order to give employees control of their time and let them decide what projects to work on.
“From now on no one would tell anyone what to do, not even the CEO. (Me!), said Carson on his blog.
In removing managers from its working practices, Treehouse wanted to get away from the trend of everyone getting abstracted from doing and instead focusing their attention on structuring.
With workers spread out around the world, Treehouse has company-wide meetings once a year where everyone gets together for a hang out and drinks. The company also has 15 minute teleconferencing videos a month in which they talk about “big picture things.”
So has Treehouse's bold, new model generated growth? Prior to going 'managerless', in 2013 Treehouse had 60 employees, seven managers and four executives. Today the company has more than 70 full-time employees, 70,000 students and are generating $10,000,000 in revenue a year.
With such a strong, global workforce and generating such a healthy amount of annual revenue, it is difficult to argue Treehouse's no manager model isn't working.
Google's 20% time
Treehouse and Valve's objective to give employees more freedom and time to think for themselves is a similar aim of Google's “20% time”. Google's ambitious new employment model allows workers to devote one day a week to side projects.
Is Google's new employee 'perk' working?
Industry experts have cited the “20% time” as being a smart move. Forbes speaks of how the most successful 5% of organisations maintain:
“The agility to make strategic shifts in their businesses and take advantage of windows of opportunity.”
Google, states business strategy advisers Kotter International, with its 20% time is halfway there.
Flexible working and co-working centres
One theme is consistent throughout these companies' various adaptations of alternative management structures, there is an emphasis on flexibility. In the golden era of digital and mobile communication, workers have never enjoyed so much freedom in terms of when and where they work.
Forrester Research's Telecommuting Forecast notes that 34 million Americans now work from home. By 2016 this figure is expected to rise to 63 million – 43% of the US workforce. With such a huge proportion of the workforce working away from traditional office environments, co-working spaces are being increasingly utilised and embraced. These co-working centres provide remote workers with the opportunity to integrate with like-minded individuals who may inspire and encourage creative juices to flow.
Alternative management structures are just another layer on the whole new model of working and employment contemporary society is clutching. It seems the savviest of employers are lapping up this culture of working without limits.
Stay tuned for Part Two of our alternative management structure analysis where we will explore how growth is enabled through the right management structure.
Carrwood Park and Brookfield court offer hotdesks and co-working space in Leeds for a business looking for flexibile work space. If you're looking for coworking in Yorkshire please do not hesitate to get in touch.
