As organisations get bigger through organic growth or acquisitions, consolidation becomes an important value creation strategy to provide economies of scale and reduce duplication of effort. Operating in a borderless and integrated fashion across geographies and functions improves growth and adaptability. Back in 1994, when Lou Gerstner took over IBM one of his major tasks to help the failing company was to reduce billions of dollars in expenses through consolidating global functions and to train staff to collaborate across borders and functions. Achieving this goal helped turn IBM around in a spectacular fashion.
But it’s rare. Even today, few large organisations do this well. It’s because successful cross-functional collaboration requires trust. When a successful group has been working together for some time, they quite easily form an in-group bias that makes it difficult to build trust and cooperate with different groups. Groups that feel threatened tend to close ranks and become more internally cohesive and exclude outsiders. It creates a vicious cycle of distrust and competitiveness between departments.
While building trust is a powerful method to bind team members together and improve performance, the downside is that it inhibits trust with outsiders. We’re wired to prefer to form allegiances with our tribes. This is why organisations struggle to remove silos and boost cross-functional collaboration.
A study by London Business School and MIT’s Sloan School of Management found that a lack of trust internally slows down execution. They discovered that one of the biggest organisational challenges with collaboration was when a senior leader from another department asked for help.
A department head would say ‘yes’ to the request (so as to appear that they were doing the right thing), but would fail to attend to it, mainly because they didn’t know how vital it was to the organisation as a whole, so other priorities for their business unit called their attention.
The result was senior managers trusted colleagues in other departments or business units to deliver at a pitiful 10% of the time.
That’s why many unit leaders prefer to contract externally for services, rather than collaborate in-house. They have more security and control when dealing with an outside group. Collaborating internally creates the risk of increasing organisational politics and dissent. And you can’t fire or sue a department when they violate trust.
Often, it’s the organisational structure that gets in the way of people being able to do their best work and in fact, collaborate. Let’s look at five ways to remove roadblocks to collaboration.
1. Improving circumstantial risk
Typically, when senior leaders prefer to contract externally or avoid working with another department it’s because it’s perceived as too risky (late deliverables, shoddy work) making them uncomfortably vulnerable to the other party . If an organisation wants to foster group collaboration, it must minimise the risks of collaboration and actually reverse the risk. That is by penalising leaders that compete with each other or avoid collaboration when it would hurt the company.
This responsibility belongs to the CEO to remove any roadblocks to collaboration and to drive a “one firm” focus that moves people beyond narrow self-interests and commit to common goals. The CEO must constantly reinforce the importance of being part of an organisation beyond geographical, business unit or functional identity.
Take EY, a global consultancy, that from the moment a new recruit considers a career, the values of “respect, integrity and teaming”, “building relationships by doing the right thing” and “making decisions that affect the way we experience each other” are constantly communicated. With 212,000 staff worldwide, collaboration is paramount to not only EY’s success but also their clients. After all, client needs are frequently changing and they expect collaboration and that working with one EY consultant provides them with the expertise of the entire firm. EY employees know that not only are they expected to work with teams in different offices, but they might need to relocate. This constant communication ensures that EY employees are not only recruited for their ability to collaborate, but it is a natural part of their job that they accept and embrace. For this reason, EY is considered the front-runner to regional integration out of the big four consultancies having significantly restructured to foster global collaboration.
EY employees win because they receive much broader business experience to help them in their career. While EY wins because they upskill their staff and provide them with a valuable “end-to-end” view of business, so they can see how everything works within the company. Unfortunately, far too many companies are short-sighted with low trust department leaders who refuse to allow their employees to work in other departments, frustrating not only their employees but other leaders as well.
It’s up to the CEO to change this and create a strong culture of unity. As Dr Robert Hurley, says in the book The Decision to Trust, it’s about the CEO and senior executive team monitoring leadership behaviours are calling out those that reduce collaboration. As one president told his managers: “If you do the right thing for the enterprise and the customer, I assure you that you will have my support. If you hurt the customer or the enterprise by doing the wrong thing out of self-interest, you will not have my support.”
2. A Shared Identity
People feel greater trust and empathy toward people who are similar to themselves and are part of the same social circles. A clear sense of purpose, values and mission connect everyone together through being able to collectively see the meaning of their work. It’s how you get a diverse group of people aligned.
The central pillar for building trust is a corporate purpose that’s defined by a genuine commitment to the social good. Purpose is what a company stands for and creates value for employees, customers and society.
A social purpose provides employees with the context they need to understand how their work makes a difference to the world. It lets everyone know how much the organisation cares, which in turn makes them less likely to believe the organisation just exists to make money. It makes sense because we’re more likely to trust a company if we can see evidence of consistent action and behaviour that indicates good intent.
Focusing on purpose rather than profits is what builds business confidence and therefore, trust.
A meaningful purpose and values embedded in an organisation create a strong workplace culture that is geared toward cultivating the human instinct to bond. The challenge is to ensure that it unifies the total workforce together, and provides meaningful in-group status, rather than allow employees to drift into silos and bond only with those in their department.
It also means pivoting the organisation towards a stakeholder approach that focuses on the needs of different groups when making decisions such as employees, customers, local communities, stockholders and debtors, rather than the more traditional shareholder perspective which is centred on the organisation existing to maximising the wealth of its owners.
3. Aligning Interests
Having a united culture with a shared purpose, values and goals help employees to connect to the meaning behind their work and their personal impact. But it’s not enough on its own. Social identity theory has found that we are still quite tribal and weigh up whether we can trust members from other departments (tribes) based on a tallying up our similarities and differences.
Where trust often breaks down between departments is where the complexity of misaligned interests is not acknowledged, much less dealt with. The most trusted leaders navigate this territory by carefully thinking in terms of integration and alignment of interests within the overall strategy of the organisation.
An example of misaligned interests is when marketing wants a new product out on the shelves before Christmas, pressuring operations to speed up, who are concerned about quality and costs. For marketing to succeed, operations will need to work overtime and incur higher expenses. Unless operations feel part of the one team, they will resist cooperating when it will penalise them but benefit marketing and even the whole organisation.
When employees can’t see that working together enables everyone to win, it becomes too easy for differences, rather than similarities to shape trust relations. The result is increased friction, poor execution and missed deadlines.
Instead, if marketing and operations work together on the problem of how to increase production and quality before the Christmas rush they are more likely to bond with each other. It’s all about having a collaborative approach to empower groups to make the decision as to whose interests should be best served when there are competing agendas.
High-trust leaders are effectively integrators who deeply understand why the organisation exists (purpose), the required behaviours (values) and the obligations to stakeholders needed to achieve the company vision. They work to align and integrate all stakeholder interests, through ensuring that departmental leaders understand each other’s perspectives. They make decisions that are fair and take all stakeholders into account, while also outlining clear expectations. At the same time, they demonstrate that they care that the other department is successful, rather than displaying self-interested and competitive behaviours.
4. Changing Incentives and Rewards
Once interests are aligned, improving how profit or credit for success is shared among internal collaborators becomes important. A CEO I was speaking to was frustrated with the rewards system of the multinational company that he worked at that incentivised regional CEOs to compete with each other. While he looked after one national region, his biggest gripe was ensuring that other CEOs didn’t claim work in his territory. Highly competitive sales quotas and a culture where leaders were set against each other meant that he didn’t trust other CEOs to do the right thing and he spent unnecessary time ensuring his turf was protected. Tendering for the same work was an issue (and perceived as embarrassing by this CEO).
This issue highlights two problems – leaders who need to collaborate and figure out how to make it work, but also systems that need to change, in order to make it favourable to collaborate.
In low trust environments, leaders pit employees against each other under the false belief that competitive pressures will lift performance. Unfortunately, all it does is create an environment where people are out for themselves; hoarding information and not supporting others. The sort of behaviours that are unsuited to solving tomorrow’s complex problems.
In contrast, trusted leaders share and manage risk throughout a team. They focus on long-term impact, rather than short-term business performance. Instead of individual sales quotas, teams work together as a group to seize market opportunities. This fosters collaboration, innovation, sharing information and co-operating to bring in new business together. Rather than individuals being distracted by the need to protect themselves and their own self-promoting agenda.
In other words, high-performance teams share a joint commitment to achieving the highest standards and the best results. Everyone is aligned to achieving the group goal. A common yardstick of success is that teams win together, not individuals.
For organisations who really want to improve teamwork, restructuring the rewards structure to incentivise the correct trust behaviours required for teamwork is a good place to start.
5. Create New Guidelines
As part of the effort to reduce circumstantial risk, it’s important that the CEO consults with executive leaders on the best way to remove conflicting incentive and reward systems and defines new rules for costs and revenue sharing, incentives that promote internal synergy and partnering across the enterprise. There must also be a guideline for how groups make the right decision concerning whose interests are served when agendas compete.
This is all about getting leaders to transition from “I” to “We” in their thinking and decision making. Often, these behaviours are so entrenched in manager or leadership behaviours that it takes an outsider to challenge status quo thinking and enable leaders to finally see suboptimal behaviours. An example to help breakthrough enmeshed mindsets is the Delivering Leadership Results through Collaboration roundtable.
To further embed new guidelines to improve trust and reduce risk, the organisation must demonstrate they mean business by introducing new ways of doing things that foster trust-building across boundaries. For example, a CEO might start a cross functional group of leaders who meet each month to work on a project that benefits the whole company or sets up organisation-wide interest groups or councils to enable dialogue. Other examples to improve collaboration include installing knowledge management systems to make it easier to share information.
Further, rewarding examples of valuable collaboration among a cross functional team can also be done through introducing a special bonus for leaders or teams who successfully demonstrate collaborating on a project across an organisation or having an awards night dedicated to celebrating cooperative efforts.
In the end, how leaders define and communicate collective interests and reward those who exhibit the right behaviours will determine how much trust and collective action are generated.
Overall, improving collaboration boils down to having leaders that are recruited on their ability to work with others and who understand that their job requires them to cooperate with and serve all stakeholders rather than competing with them. This can only be done successfully if leaders are empowered to challenge issues in the system that block collaboration.
The outcome is that leaders build lasting value, engage all stakeholders in the process and create an environment where innovation and thriving are possible.
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