How corporate hierarchies have dissolved during the pandemic

One of the more unex­pect­ed side effects of the pan­dem­ic has been that it has steam­rollered organ­i­sa­tion­al hier­ar­chies. Many busi­ness­es have emerged from the Covid cri­sis much flat­ter – cul­tur­al­ly, at least – because of their enforced adop­tion of remote work­ing.

Their retreat from HQ has removed sev­er­al of the phys­i­cal sym­bols of senior­i­ty – the CEO’s well-appoint­ed cor­ner office, for instance. In the era of online col­lab­o­ra­tion soft­ware such as Teams and Zoom, the per­son lead­ing the meet­ing no longer sits at the head of the table. 

Mean­while, many firms, par­tic­u­lar­ly those whose sales rev­enues have been dec­i­mat­ed by Covid, have sought to adopt a so-called rev­enue oper­a­tions (RevOps) struc­ture. In this set-up, the tra­di­tion­al silos of sales, mar­ket­ing and cus­tomer suc­cess are com­bined, either under a new over­all head of RevOps or a rev­enue board mak­ing the lead­ers of those three teams coop­er­ate more close­ly. They will share tech­nol­o­gy, data and, cru­cial­ly, tar­gets. 

Hier­ar­chies have also been under pres­sure from a dra­mat­ic growth in merg­ers and acqui­si­tions since the start of the pan­dem­ic. Accord­ing to January’s EY 2022 CEO Out­look Sur­vey, 2021 was the strongest year on record in M&A terms, with £4.5tn of deals announced. The poll of more than 2,000 busi­ness lead­ers in 51 coun­tries found that 59% were plan­ning fur­ther M&A activ­i­ty this year,

EY con­clud­ed from its find­ings that “the pan­dem­ic has been a wake-up call for many CEOs. The trans­for­ma­tion imper­a­tive is clear­er than ever.”

One com­pa­ny that has been grow­ing strong­ly through acqui­si­tion is Bab­ble Cloud, a spe­cial­ist in tele­coms tech­nol­o­gy. Its direc­tor of RevOps is Alex Williams. 

“Bab­ble is an acquis­i­tive com­pa­ny,” he says. “That brings suc­cess, but the speed at which we’re grow­ing also cre­ates chal­lenges across the organ­i­sa­tion, oper­a­tional­ly and cul­tur­al­ly. As with any busi­ness that’s under­go­ing rapid change, silos are being gen­er­at­ed.” 

One of the argu­ments at the heart of RevOps move­ment is that “silos sep­a­rat­ing a firm’s go-to-mar­ket teams (sales, mar­ket­ing and cus­tomer suc­cess) – and silos sep­a­rat­ing the go-to-mar­ket teams from the ops/engineering teams – are poten­tial­ly los­ing the com­pa­ny rev­enue. As you grow, the silo chal­lenges are going to become even greater,” Williams adds. “In many cas­es, you’ll have very few peo­ple sit­ting at the top of a busi­ness who can get a good flow of infor­ma­tion from across the organ­i­sa­tion, but you won’t have the same flow below that lev­el.”

Signal.ai, a provider of AI-pow­ered deci­sion-mak­ing tools, is a com­pa­ny that has trans­formed itself, hav­ing grasped the prob­lems that silos can cause in cer­tain key depart­ments.

Kirsty Charl­ton, the firm’s vice-pres­i­dent of RevOps, says: “In silos, team lead­ers all have their own pri­or­i­ties, which tend to con­cern their own team’s effi­cien­cy. This struc­ture doesn’t enable a whole-com­pa­ny per­spec­tive. You might have the VP of sales and all they get all day from their reps are fights over leads, whether they’ve come from mar­ket­ing or sales.” 

She cites the case of one com­pa­ny where the mar­ket­ing team was cel­e­brat­ing hit­ting its tar­get for lead gen­er­a­tion while the sales team’s morale was poor, hav­ing missed its tar­get by 50%.

Chang­ing such a dys­func­tion­al arrange­ment still isn’t easy, Charl­ton notes. “Peo­ple are sud­den­ly work­ing towards a dif­fer­ent goal. They love the sound of RevOps. But, if you were to tell the sales team and they are busy man­ag­ing their pipeline, that would sound like a lot of work to them.”

But com­pa­nies that have made the effort to trans­form are see­ing hand­some returns on their invest­ment. Research by the Boston Con­sult­ing Group indi­cates that such firms have enjoyed pro­duc­tiv­i­ty and prof­itabil­i­ty increas­es of about 15%. 

Charl­ton believes that the Covid cri­sis has served to flat­ten hier­ar­chies. 

“The gap between lead­er­ship and entry lev­el has shrunk mas­sive­ly. Part of this is down to the tech,” she argues. “But the cal­i­bre of entry-lev­el staff, in terms of both skills and ambi­tions, has also increased.”

A short­age of skilled can­di­dates on the employ­ment mar­ket, par­tic­u­lar­ly in the tech sec­tor, has meant that employ­ers are hav­ing to spend more on get­ting new recruits up and run­ning at full com­pe­tence as soon as pos­si­ble.

“The invest­ment that employ­ers have made in onboard­ing and upskilling peo­ple has increased,” Charl­ton says. “We are mak­ing a mas­sive invest­ment in enable­ment. To be suc­cess­ful, we must get our peo­ple ready with­in a year. Giv­en the great res­ig­na­tion, those firms that can get their teams up to speed the quick­est will win.”

Dr Gian­vi­to Lan­zol­la is pro­fes­sor of strat­e­gy at the Bayes Busi­ness School at City Uni­ver­si­ty of Lon­don. He has observed that a grow­ing num­ber of enter­pris­es have been engag­ing in trans­for­ma­tive part­ner­ships. Notable exam­ples include Apple work­ing with app devel­op­ers and the Mete­o­ro­log­i­cal Office offer­ing data ser­vices to air­lines.

“Oper­a­tional mod­els become more open and inte­grat­ed in ecosys­tems where­by val­ue is co-cre­at­ed and co-deliv­ered by dif­fer­ent com­pa­nies,” Lan­zol­la says.

He adds that part­ners need to be able to man­age poten­tial­ly large pow­er imbal­ances in their rela­tion­ship and, pos­si­bly, inte­grate their tech­nolo­gies to an extent.

“Anoth­er aspect of tech­nol­o­gy-enabled busi­ness trans­for­ma­tions that’s often over­looked is the issue of organ­i­sa­tion­al con­trols,” Lan­zol­la says. “The use of dig­i­tal tech­nol­o­gy in trans­for­ma­tions often trig­gers employ­ees into try­ing to ‘game’ that tech­nol­o­gy. This behav­iour can lead to the pro­duc­tion of biased data and, poten­tial­ly, a dete­ri­o­ra­tion in the organisation’s cul­ture.”

Hier­ar­chies in even the most con­ser­v­a­tive of indus­tries haven’t escaped a shake-up over the past cou­ple of years.

While for­mal struc­tures in the legal pro­fes­sion haven’t changed, infor­mal ones cer­tain­ly have, accord­ing to Jonathan Bond, direc­tor of HR and learn­ing at law firm Pin­sent Masons. 

“Senior peo­ple seem more acces­si­ble now, owing to the insight into their home lives that the use of video meet­ings has brought, the more infor­mal dress codes that have been adopt­ed and the gen­er­al break-up of tra­di­tion­al work­ing styles and norms,” he says.

Bond reports that, while the time it takes to reach part­ner­ship lev­el in law firms has gen­er­al­ly length­ened, “the route to being involved in more strate­gic work has become short­er. This is part­ly because we’re bet­ter at recog­nis­ing tal­ent and less reliant on the old-fash­ioned max­im that ‘you can do X only if you have Y years of post-qual­i­fi­ca­tion expe­ri­ence’.”

Mark Jenk­ins, emer­i­tus pro­fes­sor of busi­ness strat­e­gy at Cran­field School of Man­age­ment, is an expert in inno­va­tion, com­pet­i­tive strat­e­gy and high-per­form­ing cul­tures. He would advise any firm that’s “seri­ous about refor­mat­ting its busi­ness around new tech­nolo­gies that this should have some pret­ty fun­da­men­tal impacts, par­tic­u­lar­ly on man­age­r­i­al hier­ar­chies and the whole nature of man­age­ment. The idea of man­agers as facil­i­ta­tors, rather than con­trollers, may be one change that would have a sig­nif­i­cant effect.”

He notes that some firms have yet not had the chance to con­sid­er such mat­ters. “These com­pa­nies are still oper­at­ing in cri­sis mode rather than tak­ing stock on how to advance in the longer term. A col­league of mine uses the phrase ’nev­er nor­mal’, which I think is how some peo­ple are feel­ing at the moment.”

That said, in a nev­er-nor­mal world, few struc­tures exist that are so sacred that they can­not be reshaped into some­thing more fit for pur­pose in these uncer­tain times.