Saturday, December 16, 2017

What is a Corporate Silo? How to Break Them?

Silos can limit cross-functional decision making and allow inefficiencies to creep in. Silos occur when departments don't communicate well with each other limiting their overall ability to function as a single business entity. The more barriers that are created, typically the more inefficient the business. At the core issue of silo creation is often the leadership team and their desire to create their own fiefdoms.

It is natural that as people rise in position they seek more control and additional opportunities to choose their own courses of actions. The department becomes an extension of its senior management. If the wrong tone and culture arises it can limit the interaction between the departments.

Limited information sharing leads to decisions within isolation. That means decisions won't be well thought out or take into consideration the skills, needs and abilities of other departments. The organization slowly looses its ability to compete against others that have more efficient operations and ability to share information and resources.

This is something that can be fixed but it takes some thoughtfulness by key leaders. Each company has their own unique challenges and will have to cater their turnaround efforts based on the uniqueness of the entity and the characteristics of their market.

1. Create cross-departmental teams: Teams from different departments will help ensure that core decisions such as product lines and general operations take into account other departments and the needs of the entire organization.

2. 360 Performance Appraisals: Cross department 360 performance appraisals for managers encourages them to work with other departments and be accountable to each other.

3. Total Management Compensation Packages: Part of key executive management should be based on how the entire company operates. Bonuses that are associated with the organizations health help them understand the need to take care of the entire organization.

4. Shake up the Core Team: Get rid of silo executives that refuse to work with others and find replacements that are more collaborative in nature.

5. Culture: Encourage and reward behaviors that work with others. Create an empowered egalitarian environment.

6. Revamp Processes: Revamp processes so that approvals of other departments that are impacted are needed. Make sure that processes make connections between departments.

7. Information Networks and Corporate Communication: Disseminate information to others and create communication networks based on cross-department needs.

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