Organizational silos in the 21st century

My friend Joanna shared an interesting Harvard Business Review article yesterday morning entitled “It’s Time to Split HR“. Along with another link article that was shared by someone else a few minutes later, I found myself making a rather lengthy pontification about how organizations treat employees, particularly with respect to pay. Originally, I was going to focus on that, but the more I thought about it, the more I think there are two separate-but-related posts. So in this one, I’ll focus on the HBR article.

Ram Charan lays out an interesting argument for bifurcating the traditional Human Resources department into administration (e.g. compensation, hiring, etc.) and leadership (e.g. personnel development) roles. It’s certainly a proposal worth considering. As commenter Jonathan Magid pointed out, the two roles of HR are essentially to protect the organization from its employees and to develop those same employees. HR effectively has to serve two masters. In most cases where there’s a conflict of interest, HR will side with the organization. That makes sense, since the organization is the one writing the pay checks.

Charan, however, doesn’t really address this. His main concern seems to be the lack of strategic understanding within the ranks of HR leadership. Chief Human Resources Offices (CHROs), he writes, are too specialized in HR functional areas and lack understanding of the larger organization. This is true of all areas, though. Especially those that are not core to the business. Too often, IT leadership is painted (appropriately) with the same brush. That doesn’t necessarily mean that the area needs to go away.

The best employees are familiar with other areas of the business, not just those under their direct purview. This is true of all functional areas and at all levels. In a previous job, we frequently lamented that HR wasn’t as helpful as they could be in vetting resumes because they didn’t understand technology. Go on any forum where technical people gather and eventually you’ll find disparaging remarks and advice to game keywords because that’s all HR will understand. In my experience, the issue isn’t that HR staff are terrible human beings, it’s that they’re just too siloed.

Everyone “knows” that silos are bad. Bureaucratic fiefdoms tend to be self-reenforcing and lead to reactionary, defensive tactics like information hoarding in order to keep justifying their existence. What I find so interesting is that organizations can’t seem to avoid forming silos. Siloization is like an organizational version of entropy: left alone, it will increase over time.

There are certainly benefits to silos. They make the organization easier to understand. They allow for deep specialization. Knowledge transfer is simplified. But they’re a losing prospect in the longer term.

A good friend of mine directs the IT support organization for a large academic unit within a large midwestern university. This group is notable because it provides excellent customer service (according to their internal measures, the opinions of the customers, and their reputation on campus) and actively suppresses silo formation. He told me that silo suppression is “extremely expensive, and very difficult to explain/justify to people.”

Silo suppression is expensive because it’s a long-term investment in the organization. Rotating senior personnel through phone duty is expensive as compared to putting the newest, cheapest hire on that task all day. Requiring all knowledge to be shared among at least one colleague requires a larger staff. Hiring and retaining people who buy into the organizational philosophy is a slower and more expensive process. All of this looks terrible in a short-term view.

Where silo suppression pays off is in the long term. Vacations, illnesses, and employee turnover are less disruptive because the knowledge is retained. Someone else in the organization can pick up dropped issues without a long spin-up time. Employees develop a broader view of their work and can make useful suggestions for areas outside of their main expertise.

There are undoubtedly psychological and sociological reasons that we gravitate toward developing silos. Organizational leaders must be aware of this tendency and actively work to counter it. The problem with HR isn’t that the people or the functions are bad. The problem is that HR is not out “among the people.” Embedding HR representatives within other functional areas of an organization is almost certain to improve HR’s understanding of the larger business. In addition, it may help make HR more approachable and better understood by the rest of the organization, allowing employees to make the best use of the HR resources available.

Organizational silos are interesting. We know that they’re bad, but we always end up reverting to them over time. Maybe just we need better silos. Silos built around projects that can easily be torn down and put up somewhere else may give us the best of both worlds.