This article is part of our Going Against the Grain series, which tells the stories of companies bold enough to break business norms and try out new ideas. To explore the rest of the series, head here.
It’s common for employees to take umbrage with their managers, but how well would the workplace function without some sort of chain of command?
Although 57% of employees surveyed as part of Development Dimensions International’s Frontline Leader Project admitted to having left a job because of their manager, the classic pyramid structure — with the CEO perched at the top — remains ubiquitous.
Digital marketing consultancy Jellyfish is one firm that’s decided to challenge the norm. Its CEO and co-founder, Rob Pierre, found that the traditional hierarchical system under which is was operating was too constraining and promoted the wrong behaviour.
“People were assessing their value based on the number of people they were managing, not how good they were at the discipline that had got them into a senior position in the first place,” he recalls.
Under that organisational structure, employees were caught up in bureaucracy. People’s diaries were packed with scheduled one-to-one meetings with their line managers. Reflecting on this period, Pierre says: “Jellyfish had become a job factory; our product was managing people.”
It was at that point, about two years ago, that he decided to unpick Jellyfish’s structure, starting with his own position. Managers were removed and heads of departments were replaced with “steering groups”, with the aim of enabling decision-making responsibilities to be shared among employees.
This restructuring has enabled more people to “add value and give direction to the way in which we’re going to work”, Pierre says.
It also solved a second problem facing the business, which acquired five companies at the start of the year. “When you’ve got senior people coming in from an acquired organisation, it raises awkward questions about the position at which they should enter the business,” Pierre explains. “This structure allows us to continue growing without many of the political and bureaucratic challenges that other large organisations face.”
Making the grade
With no line managers, promotions are also handled differently. All employees have been given a grade that reflects their salary, department and location. Instead of having to be recommended for promotion by a manager, an employee seeking an enhanced grade has to compile a business case to demonstrate how their value to the enterprise has increased. Cases are anonymised and judged by a panel of employees from across the company to determine whether that applicant’s pay should be increased.
Unsurprisingly, when the new system was introduced, people seeking a better grade compared themselves with their colleagues. But applicants quickly realised that if they could show how they were adding more value they had scope to increase their salary independently of what others were earning.
“This [grading system] is not about anybody else,” Pierre says. “We want you to improve and to be a better professional than you were yesterday.”
Theoretically, anyone in the organisation could earn the same salary as the CEO under this system. “If someone were helping us to win all our pitches and helping to develop all our products, they could make a business case showing the value exchange and be remunerated accordingly,” Pierre says.
More than 800 employees have been promoted since the grading structure was introduced, 57% of whom are women. Pierre claims that removing unconscious bias from the process has helped the firm to recognise a more diverse array of talents.
“I was confidently told that women are less likely to promote themselves, so our promotion system was biased towards males,” he says. “I’m delighted that the system gives everyone an equal opportunity to make their case without having to be the loudest person in the room.”
Pierre admits that it has taken time for people to “break the muscle memory” that comes from building a career in hierarchical organisations. Listing some of the common misconceptions, he says: “People assume that you have no leadership so it results in anarchy. In reality, it’s about putting emphasis on leadership, not line management, and giving true autonomy and accountability to the individual.”
Given that Jellyfish has 40 offices around the world, cultural differences made the promotion application process harder for employees in some locations. “One of our senior people in India spoke to me and explained that it’s culturally frowned on to boast,” Pierre explains.
The Indian operation solved this by adapting the promotion process, enabling other team members to help write the applicants’ cases as part of a group session.
Pierre believes that Jellyfish’s experiences show that other companies can adopt a manager-free structure.
“It relies on everyone understanding where they fit in and where they add value,” he says, adding that his advice to any CEO considering a similar change would be to “really focus on the outcomes you want, get everyone in leadership to become an advocate and address any reservations immediately”.