Over a decade ago, flat hierarchies were the toast of management thinking. Company after company cut layers or grades in the organisational structure to create a flatter and more responsive setup. But by now, the concept has taken a 180-degree turn. The new thinking is that having more rungs will help an organisation address an individual?s professional growth aspirations.
The confession comes from none other than Peter Cappelli, George W Taylor Professor of Management and director, Centre for Human Resource, The Wharton School, University of Pennsylvania. On an email to FE, he says, ?We thought a decade ago that flat hierarchies were the key to success, that it made it easier to redeploy workers and made cross-functional work easier. We also thought that workers liked less hierarchy. They probably do when they are not at the top of it. But now US employers are getting worried not only about retention, which is a much bigger problem in India than it is here, but also about worker complaints that they are not being developed, that there is no career advancement,? adding, ?what exactly workers mean by this isn?t completely clear?do they mean development in the sense of getting more skills and learning or do they mean development in the sense of just more money or do they have this idea about advancing in a hierarchy??
Says D Subramanyam, vice-president, group human resources management, Minda Industries Ltd, gives the issue a local perspective. He says, ?Delayering has been in vogue with the inception of Japanese management in India and it got a boost with the rise in IT industry. The inherent belief is that the less the number of layers of hierarchy the better it is for the organisation. Many organisations have gone ahead and done delayering. But in a country like India, job titles and promotions form an important part of social life and peer comparison.?
Any process, therefore, is culture-specific and the way people are handled in an organisation depends largely on local culture. He remarks, ?Individual expectation is to get promotion and this will have a bearing on a person?s social standing. Job titles carry a kind of respect and, hence the craving for promotions and job titles. Only increasing the layers can satisfy this. Many manufacturing organisations that went in for delayering had come back to the relayering process, because in the former they were unable to meet the aspirations of their employees. We too did relayering a couple of years ago.?
Some experts believe India has never gone through a delayering process, because of its obsession with job titles. Says Tanmay Kapoor, partner, business advisory services, Ernst & Young, ?India has always been a layered market. Delayering as such has not taken place here. As a market, India has always been slightly different with respect to global markets. People here are pretty status-conscious. Indian employees would want both designation and compensation. Our market, in this respect, is similar to the US market, whereas Europe is different, there are more concerned about their role in the organisation and their compensation.?
With globalisation, there is always pressure on organisations to follow flat hierarchies but local conditions demand relayering. Mostly, every organisation decides on its own rather than following the general rule. Arun Jaura, group chief technology officer, Mahindra & Mahindra Ltd, who has experience of both Indian and the US markets, says, ?In the Indian industry, the employees are more title- and rank-conscious, more so compared to the US organisations. Generally, the number of layers in a technical growth ladder is fewer and each title or position is earned by virtue of industry recognition, number of patents & publications, and internal mentoring and expertise. In a technical ladder, the depth of domain knowledge, number of R&D and innovation years besides publications override all aspects.?
Jaura adds: ?Based on my experience in the US, Canada and India, I have seen the global challenge is rewards & recognition (R&R). Many Indian organisations are still catching up on R&R, as we are exponentially growing and widening our canvass in exports markets.?
In today?s demand-greater-than-supply situation that exists for good quality manpower across all levels, retention (crucial for organisations) becomes even more critical.
Organisations seek different ways to achieve desired minimum levels of retention. Re-layering seems to have become one such way of retaining talent. Says Anand Sudarshan, MD & CEO, Manipal Education, ?I believe re-layering will be far down the totem pole of efforts that can be taken to increase retention?providing the employee with a career path s/he can look forward to, a work ambience that promotes merit and de-promotes silos, good & strong leadership at all levels and a high performance culture?these are more critical than just re-layering. Combined, re-layering can be used judiciously, where it?s appropriate.?
Any management technique blindly applied will not work. Choice of a technique, and the implementation of it, has to be assessed against the context of an organisation. Says E Balaji, CEO, Ma Foi Management Consultants Ltd, ?Only few companies have gone about doing a proper job evaluation?a process of systematically determining the relative value of jobs in an organisation. In all cases, the idea is to evaluate the job, not the person doing it. This creates a sense of role clarity in the minds of people and they value promotions even if those are grade changes. Otherwise employees feel disappointed when they get a promotion letter with no change in their roles or responsibilities.?
Many companies came under pressure to create faster growth avenues for their high performers when the overall market was expanding and many companies were luring talent by offering fancier titles. Says Sangeeta Singh, executive director, human resources, Ernst & Young, ?Gimmicks never help in retaining employees?they are both intelligent and exposed sufficiently to see what is being done. If we have a rational for relayering, then we will need to explain it to our employees and only then implement it.? Just by de-layering and making each step painfully high to climb, the organisation cannot provide an employee with an attainable growth path. Says Aquil Busrai, executive director, HR, IBM India Pvt Ltd, ?Employees are savvy enough to realise which positions are genuinely senior and which ones are pseudo-senior. At very junior levels, good title or definition works to some extent but from the middle-level onwards employees are looking for real job content to feel satisfied.?
One cannot discount the fact the business environment of an organisation is crucial in retaining employees. Says Deep Kalra, founder & CEO of travel portal makemytrip.com, ?The attrition problem can be solved temporarily by such structuring, as re-layering gives opportunities for employees?one can actually give them promotions every year and keep them motivated. However, this population may only be 8%-10% of a company?s total strength. In the long run, it?s their interaction with team members, care and respect that make employees stick to an organisation.?
Vivek Mittal, CEO of the Indian subsidiary of 7N, a Danish consulting and training company, supports a multi-layered organisation. ?Hierarchies are one of the best ways to reward employees and at the same time it?s one of the best ways to retain talent within the organisation and create succession plans,? he says.
While globally flat hierarchies may be declining, in India the concept never really took root, as people here love ranks and titles. Exchanging business cards that underline titles in bold is de rigeur in this market.
