My grandparents’ Idaho farm had rows of large, corrugated steel silos where grain was stored from harvest time until buyers with semi-trucks hauled it away. Silos were not only effective in keeping the grain clean and dry, but they also allowed for the red wheat to be stored separately from white wheat or barley or oats.
Silos are beneficial for agriculture, but organizational silos are a serious business concern and have been a topic of boardroom debate for the last 30 years. The term “organizational silo” refers to a business division that isn’t communicating or collaborating with others outside of their unit. Ideas and institutional knowledge are kept within those metaphorical walls rather than shared for the benefit of the broader organization. We have found that an organization’s misalignment can contribute to departmental silos, causing inefficiencies and lack of cross-functional cooperation. Overcoming or eliminating silos by utilizing effective linking mechanisms will enable your organization to achieve its strategies.
Silos occur when certain departments are misaligned in the organization design in a way that does not facilitate interdepartmental collaboration and communication.
How are Organizational Silos Formed?
Leaders might look at the organization and dismiss interdepartmental inefficiencies as being caused by employee behavioral deficiencies or lack of training. But silos do not appear accidentally, nor is it a coincidence that most organizations struggle with interdepartmental turf wars. When there is misalignment between departments, efficiency in the overall operation is reduced, morale is lowered, and the net effect could be the demise of a productive company culture.
Siloed employees often become frustrated with their department or the whole organization when they do not feel empowered to solve a problem they have identified. These behaviors may be a result of silos, but they are not the root cause. It is the responsibility of leaders to recognize when misaligned organizational choices are creating silos and then to develop effective, long-term solutions that are scalable, executable, and realistic.
Overcoming Organizational Silos with Linking Mechanisms
There is no one perfect organization design. While organizations must naturally group work and create boundaries between departments and divisions, these boundaries often have certain downsides. If an organization chooses a strategy to provide a differentiated customer experience, for example, the organization will need methods to connect across boundaries, allowing employees to share and process relevant customer experience information. This is done using linking mechanisms.
Linking mechanisms include everything from informal contacts to formal policies and rules, technology (including inter-company social media channels), cross-discipline or process management teams, goals and measures, and structural linkages like hierarchies or matrix organizations. The cost and effectiveness of different linking mechanisms vary widely, so leaders must carefully evaluate which linkages are appropriate for their needs.
Too many linkages may become cumbersome and slow down the organization or weigh it down with unnecessary expenses. Too few may mean missed opportunities or confusion. It is usually necessary to recognize and prioritize interdependencies (areas where a linkage is needed) and then implement the appropriate linking mechanism as needed. Keep in mind not all linking mechanisms need to be expensive or elaborate to incorporate. Utilizing the appropriate type of linking mechanisms—low cost and informal when possible—can help mitigate gaps and tradeoffs and truly enable the strategy.
Let’s revisit the example we shared above about the organization seeking to provide a differentiated customer experience. The sales department may naturally understand the role they play in the customer experience because they deal directly with customers, but the IT department may not. IT leaders and employees certainly want the organization to have happy customers, but because they do not interact with customers directly, they might not have a clear idea of the customers’ wants and needs. Because of the cross-department collaboration required, commitment to the chosen strategy needs to start with leaders at the top and be embraced throughout each department of the organization. Helping all employees understand how they link to each other and back to the customer is critical.
The Power of Effective Linking Mechanisms
In their book, The Power of Moments, authors Chip Heath and Dan Heath shared an example of two departments that had been hindered by a lack of strong leadership and the necessary linking mechanisms. Rather than working hand in hand, the marketing and sales teams had been operating in separate organizational silos. The marketing team would create slick promotional materials and advertising, and the sales team would complain that the materials did not reflect how customers perceived the company’s products.
Concerned leaders set up an off-site meeting to tackle the lack of collaboration. Among other activities, they surprised the group by inviting a customer to address them. The customer discussed the “whiplash” effect of talking with the marketing and sales teams, noting, “It’s like talking to two different companies.” The retreat ultimately created shared context and experiences that moved the two departments to work together in the best interests of the company and its customers.
Key Tips for Leaders to Consider:
Address each of the following points to determine whether your organization design is supporting your business strategy:
- Linkages: Ensure your organization has the right linkages in place that amplify the strategy. It should be clearly conveyed on a company-wide basis how all departments link back to each other (interdependencies) and the customer.
- Commitment: Leaders should convey the significance and importance of creating and maintaining a common operating language. When leaders throughout the organization share the same data, vocabulary, and “whys” behind the business strategy, it becomes part of the company’s DNA.
- Urgency: Ensure that the entire organization feels a sense of urgency for improving the linkages between departments. This should be reinforced by the way an organization prioritizes its efforts and resources.
By ensuring that all parts of the organization are interconnected and understand their role in delivering critical capabilities, leaders can prevent or eliminate silos and ultimately help their organizations succeed.