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How does a company with no managers work? (Part 2)

1st Sep 2014
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Within part 2 of this blog series into how flat organisations work, I provide insights into the practicalities of appraisals, performance and promotions.

Following on from part 1 – where I addressed the why, the company structure, as well as how decisions get made and tasks are assigned- I will continue to answer questions that have been posed to me about the unique structure of the organisation I work for (Effectory International).

I’ve been pleasantly surprised by the reactions I’ve received from the first blog. It’s clear that many of you are intrigued, some of you are bewildered, and some are very familiar with the concept already. My aim of part 2 is to (hopefully) provide you with the answers to any lingering questions you may have, and to enable readers to have a clearer picture of what working in a flat company practically entails.

How does having no boss work on a day-to-day basis? (Continued)

Back to the interesting part; the practicalities of having no manager.

  • What happens when things go wrong?

In the previous blog I discussed how our company is based on trust. As employees, we (both individually and as part of a team) are entrusted to take the necessary steps to make smart decisions. Alongside this trust, there is also an acknowledgement that things can, and do go wrong. Nothing is 100% certain to be successful.

When things do go wrong, the immediate response is, how can we fix it?

Steps are taken from the individual and team to ensure that the damage from any fault is limited. To put it literally, it’s all hands on deck. Even if it’s necessary to pull in expertise and advice from other areas of the company, we do it. Some issues are admittedly easier to solve than others, but that’s our mentality; rather than point the finger, first let’s fix the problem.

After the problem has been fixed, those involved will take time to sit and evaluate how and why it occurred. The evaluation will include all those that are involved, and where needed, additional experienced colleagues are included. After an evaluation is completed, steps are taken to try to ensure that the same issue doesn't become a reoccurring one, and depending on the situation, procedures are changed and/or processes are improved.

Instead of playing the blame game, our company accepts that things are at some point, inevitably going to go wrong. Rather than focusing on the problem, we (both individually and as a team) try to learn from it and furthermore, use it as a catalyst for improvement.

  • How are appraisals done?

Appraisals are done via feedback. Three times a year we are required to invite a minimum of 7 of our colleagues to give us feedback. We invite colleagues that we work with closely, and furthermore, are encouraged to ask colleagues for feedback on specific topics or actions.

For example, I recently worked with a colleague on producing our new global HR report. His specialties lie far away from mine in the world of data and reports. As we did however work closely on the report, and it’s unusual for us to work together on a daily basis, I asked him for feedback- specifically on the work we’d done together for the report.

Within the feedback system, we are invited to give open answered responses on what we find are the positive and negative points of our colleague, and are given training on how to give constructive feedback. In order for our appraisals to be measurable, we are then further required to grade our colleagues on three aspects: workmanship, collaboration and added value.

Once completed, the feedback is then collated and our individual reports are produced. The open ended feedback from colleagues is visible and available for us to read, and our scores are averaged. Based on the average score, we can then gauge how well we are performing, and whether or not we are performing to the expectations of our colleagues. As a follow up, we are then all actively invited to discuss the personal feedback on a 1 on 1 basis, as well as on a team level.

  • How are issues around employee performance handled and dealt with?

The foundation for our performance evaluation is the feedback system. After each round of feedback we receive our score and comments, and these insights are the basis on which we can gauge our performance.

When an employee receives a poor feedback score, the first point of action is to sit with HR and discuss the matter. The overall aim of the meeting is to discuss whether there are external factors influencing performance, or whether there is a mismatch between employee and position, or to see if there are other factors (such as team dynamics) that are negatively influencing performance.

As a follow up to a meeting with HR, the employee also sits with their team to discuss their situation, and from the two meetings action points are made to help the employee improve their performance. As employees, we are encouraged to be extremely open about our personal situation so that in the event that personal issues are affecting performance, colleagues can take this into account in their feedback.

When an employee in the company continues to score poorly in their feedback, then there is typically a decision made that it is time for the employee to move on. Should there be external factors (such as personal issues) then HR and the individual’s team will work with the individual on a longer term basis. The general approach to such matters is that should an employee consistently perform badly, it’s neither in the interest of the employee nor the company for the employee to remain at the organisation.

Before this stage is reached every effort is made either to help the employee with their situation, or to explore alternative solutions. It does, and has happened, that employees have realised they were unhappy in their current role and after some discussion and negotiation, have subsequently switched roles to great success.

  • How are promotions handled and how are the ambitions of top performers handled?

Many of the comments I received from the first blog were concerned with how promotions are handled and how top performers are dealt with.

In short, promotions are handled in a similar way to hierarchical companies. The growth path within our company is from Junior, to Medior, to Senior, with room for growth in each. Before an employee can be promoted, they need to have reached a set of criteria. Firstly, they must have held the same position for a minimum of a year and secondly, their average feedback score for the year must be above a certain level.

As with any other employee, top performers have to adhere to the above criteria. The fundamental concept is that top performers should in theory be promoted quicker, which should in turn satisfy their ambitions. In addition to this, we also have an internal rewards system where employees can receive awards from their colleagues in recognition of their work.

Due to the fact that we are a flat company, individual praise on a regular basis is perhaps lacking. There are no managers to consistently praise a top performer and this is unfortunately something that simply doesn’t exist in our organisation. Our company culture is most definitely geared towards the collective good, rather than the individual gain and in this respect ambitious top performers can miss out on the individual praise that they would otherwise receive in hierarchical organisations. It’s an issue that we’re all aware of and generally speaking, colleagues are more than forthcoming in their praise (and criticism).

My experience is that the culture of openness and fairness seems to make up for the lack of praise that some would otherwise receive.

*Part 3 (the final instalment) on the benefits and drawback to follow soon!

This blog was originally posted on LinkedIn

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