Leadership

Are CEOs Necessary?

By / Jun 9, 2014

“Leaderless” organizations are in vogue, even if they have an imperfect track record. Still, looking at the problems they intend to fix can help define your leadership style.

Who needs you?

I ask the question respectfully, but I’m also thinking about a provocation tossed out last week by Slate writer Seth Stevenson, who asks if we really need CEOs. There’s some evidence that a leaderless organization can work: Stevenson points to the example of Morning Star Co., which is the largest tomato processor in the world but operates on a system of “contract-style agreements between its workers … connecting workers in a web of shared responsibilities and expectations.”

The contracts that Morning Star uses are called “Colleague Letters of Understanding,” and if that seems like a lot of paperwork, well, there are 3,000 CLOUs floating around the company at any given time, and the company runs its own Morning Star Self-Management Institute to educate people on how to make it work. But the organization’s mission statement says that their system offers what many CEOs say they want out of their employees anyway: Collaboration, innovation, self-direction. Less micro-management, more great products and services.

“Employees are in the best position to take immediate action when circumstances demand a response or a change in course.”

“Formal hierarchy implies that there are those within the organization who have authority to direct the actions of others, and that there are others within the organization who have only limited authority,” says an explainer page on the institute’s website. “The principles of Self-Management acknowledge that those who would traditionally be viewed as the ’employees’ are, in fact, the ones who have the greatest insight into the management of their day-to-day functions and who are, further, in the best position to take immediate action when circumstances demand a response or a change in course.”

You’ve heard this sort of thing before, probably. Business pages are awash in articles about results-only work environments and adhocracies and holacracies. At least one association has abandoned the notion of having a singular CEO and instead splits the job between two people. That’s not exactly a collapsed hierarchy, but it does recognize that, in complex organizations, distributing authority makes sense. When it’s hard to keep good talent (especially in the association world, where salaries often don’t compete with the corporate sector), increasing empowerment for individual employees is simply good business sense.

To an extent, anyway. As Stevenson points out, there are examples of companies that have tested out bossless systems only to watch them fall apart. In one case, that’s because the employees’ interests weren’t in alignment with the company’s needs: At hearing-aid maker Oticon, Stevenson writes, part of the problem was that “employees were hopping around too much between different projects, glomming onto the sexiest tasks at the expense of more worthy ones, or overextending themselves by signing on to too many responsibilities at once.” Preventing that kind of drift is the kind of job task nobody wants to volunteer for.

As I’ve written before, one irony of the move toward leaderless systems (or more distributed leadership) is that they need a strong leader to take charge and make them work, particularly in the implementation phase. And the inefficiencies that crop up in collaborative environment may not be a fair trade-off from the inefficiencies of a traditional hierarchical system.

Even with those problems, it’s worth thinking about removing layers of middle management and creating more collaborative environments even if you’re not quite ready to nobly quit your job for the good of the organization. But think about that question at the top of the post: Part of leadership is identifying who in your organization—individuals or whole departments—requires your attention, whether it’s to challenge them with a new mission or simply to keep them on track. Nobody wants to be micromanaged, and no CEO wants to feel like she’s on autopilot. So maybe the best lesson to take from the checkered history of leaderless organizations is to look at what employees would do if they were left to manage by themselves. The errors and problems that inevitably emerge from such a system—that’s exactly where you’re needed.

What have you done in your organization to flatten hierarchies or distribute management? How has it worked out? Share your experiences in the comments.

Mark Athitakis

Mark Athitakis, a contributing editor for Associations Now, has written on nonprofits, the arts, and leadership for a variety of publications. He is a coauthor of The Dumbest Moments in Business History and hopes you never qualify for the sequel. More »

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