At this company everybody’s a boss, and nobody’s a boss!

My column from the Nashua Telegraph, January 18, 2012 – At Morning Star, Everybody’s a Boss, and Nobody’s a Boss

I have never had the pleasure of working in a large organization with lots of managers. Now that I think of it, I have really never had a boss. But in my law practice I work with lots of companies and lots of company employees.  I hear their stories, and I sometimes wonder whether managers are good for business. Are they really necessary, or are they just the building blocks of bureaucracy?

When I look at companies that have a lot of managers, I usually see hierarchical organizations with a “top-down” management system. The power is vested in managers higher up the food chain. There may be talk of empowering the worker bees, but for the most part I don’t buy it. The power stays at the top. In companies with top-down management, key decisions tend to be made by one overly empowered individual who is often isolated from the workers. That sort of decision-making can lead to decisions that are impractical. What looks good from the top of the pyramid can look silly to those at the bottom.

So all of this begs an interesting question:  Could a company exist without managers? Would it be possible for a company to maintain the high level of coordination that success demands without the structure provided by managers? Believe it or not, there is at least one company out there that operates in that fashion, and it is thriving.

Gary Hamel is a professor at Harvard Business School. In the December issue of the Harvard Business Review, Hamel authored an article entitled, “First, Let’s Fire All the Managers.” In it he focuses on the Morning Star Company, a $700 million dollar tomato processing company located in California.  At the Morning Star Company, Hamel writes, all 400 employees “are ridiculously empowered yet work together like members of a carefully choreographed dance team.”  The company has no managers, and no bosses. In fact, employees are not even employees. At Morning Star, they are “colleagues.”

Unlike other companies, Morning Star’s culture is completely rooted in self-management. They have taken the bureaucratic structure of most companies, crushed it, and thrown it out the window. The key to operations at Morning Star is the personal mission statement. Every year, each colleague must write a personal mission statement that sets forth how he or she will contribute to the company’s overall objective of “producing tomato products and services which consistently achieve the quality and service expectations of our customers.”  The colleague is then responsible for accomplishing the mission. Workers at Morning Star are driven by their mission statements, not by their bosses.

In addition, each year every colleague negotiates a Colleague Letter of Understanding with other colleagues who will be most impacted by the objectives set forth in their personal mission statement. These CLOU’s, as they are called, are what govern the relationships between Morning Star’s employees. They provide Morning Star with structure. But by design, the CLOU’s change from year to year, reflecting the changing priorities and issues facing the company.  Chris Rufer, the founder and president of the company, analogizes the company’s structure, such as it is, as being similar to clouds, of all things. “Clouds form and go away because atmospheric conditions, temperatures, and humidity cause molecules of water to condense or vaporize. Organizations should be the same; structures need to appear and disappear based on the forces that are acting on the organization,” Rufer says.

That analogy is not only spot on, but evidences what are perhaps the greatest advantages provided by the Morning Star model: extreme flexibility and nimbleness.  At Morning Star, departments literally come and go, like clouds. This is a much needed and radical departure from what goes on at most companies. Who among us has not experienced organizations in both the for-profit and non-profit worlds that are hamstrung by standing committees and bureaucracies that are inflexible?  Standing committees and bureaucracies often have one reason for existing, and that reason is because they always have existed. The self-management structure at Morning Star would never tolerate such nonsense.

Even compensation at Morning Star is peer-based. Every year colleagues prepare written self-assessments of their performance based on their personal mission statement. Several compensation committees are then elected by colleagues from across the entire company. Those groups then evaluate the self-assessments and set compensation levels that endeavor to align pay with the value being added to the company by each colleague.

There is no doubt that for Morning Star, the self-management structure is working. But it is not without challenges and drawbacks. Hamel points out in his article that employees who have worked in traditional companies have a tough time adjusting to the model. It takes a long time for new employees to fit in. Because there is no corporate ladder to climb, employees can find it difficult to evaluate their performance relative to their peers. At Morning Star, more responsibility is the equivalent of a bigger title. That unusual metric makes it tough for those employees who might want to leave the company for another opportunity.

Growth is another concern. While the company has grown much faster than the industry average, for obvious reasons it does not want to abandon its culture. This makes growth through acquisitions a difficult path to follow. But the advantages of the Morning Star structure still seem to outweigh the disadvantages, particularly for companies in the small to medium-size category.

Hamel concludes that colleagues at Morning Star benefit from a simple recipe for initiative. Their roles are defined broadly, they have the authority to act, and they get lots of recognition when they help others. They drive the bus. Colleagues also develop better and broader skill sets. Because there are no senior managers, the colleagues all become experts. Because there are no bosses, there are no fall guys. Accountability tends not to be an issue. The organization is extraordinarily flexible. Because key decisions are not escalated to company bosses, they get made in context, and they get made after debate and input from a number of colleagues. That leads to better outcomes. Finally, the colleagues simply get along better than employees at most companies. Because colleagues are not competing for promotions, there is much less backstabbing. All of their energy is directed toward doing their best and helping their colleagues.

Hamel’s article is well worth the money you will have to pay to HBR to obtain a copy. It even contains tips for implementing the Morning Star culture in your organization. The good news is that to do so, you don’t need to fire all the managers. All you need to do is make sure that every employee understands that from now on everyone will be a manager. What could be simpler than that?

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