Saturday, October 15, 2005

More or less, organization levels

Many companies pride at their flat organization structure. These days, (and for a few decades now), flat is in. But, some of the new tech sector companies in India have a structure that is anything but flat. In fact the number of levels have increased over the last few years.

In India, according to a friend who worked there, Tata Steel at one point had 22 levels of officer grade. To reach the top, say MD level or thereabouts, one had to reach 18. People started off at 1, say Senior Officer. After a heavy bout of restructuring, these levels were pruned to 5. Great, one would say.

Great, says conventional management wisdom, but the fact there are few levels means that the gap between two levels can be enormous. These gaps cannot be bridged in a single calender year, usually and even if they are, unless they are really significant, it does not guarantee a promotion.

In some of Indias premier IT services organizations with associates in excess of 20,000, there are a large number of levels. I dont have the exact figures, but having worked in the tech sector in India, many organizations, go against the grain of conventional wisdom in terms of the number of levels that exist in an organization. What this does is that associates have something to look forward to every one or two years, which is a good short term goal to have, which can be achieved with defined parameters of performance. The IT sector is also a sector with high attrition. By putting short goals within reach, it allows employees to focus on the next level continuously without having to look for opportunities outside. Overall, it brings a performance oriented culture to the organization and the associate feels rewarded by way of an advancement in his or her career. If there were only 5 levels in an IT organization, say Software Engineer, Project Manager, Delivery Manager, VP and EVP it would be a long time before an engineer became a Manager or a manager became a Vice President. With multiple levels in between, an engineer becomes a module lead in a year or two, then a project lead and so on.

So, what is better? I believe, a flat structure would work for smaller organizations (duh! there wont be enough people for all the multiple levels!) while organizations with more people would do well to have multiple levels. For a people intensive sector like Indias IT, a flat structure may or may not be the best thing to have. Of course, flatness may or may not mean access to the top management or great empowerment in decision making.

In either case performance has to be rewarded and that, obviously, is the key. Levels shouldnt also come either in the way of effective decision flow downwards or in getting ideas to boil to the top.

The trick employed by the IT cos here is to keep decision making roles flat and create more smaller empowered roles at lower levels. The degree of empowerment increases as one moves up and measured in terms of empowerment to take decisions, the structure is actually flat. Many of the roles are titles without a great addition to job responsibility!

1 comment:

Nilu said...

I have worked as an engineer in two companies.

In one, I was told what to do. In another, I would do something and let my boss know. It did not matter what I was called, but my second job was more fun.

So in my opinion, it does not matter what the person is called but what he does/gets paid that decides the attrition rates