MARCH 2007
SILOS: HOW TO CLIMB OUT, DEMOLISH, AND PREVENT
By Tony Mulkern
One of the paradoxes of entrepreneurial growth is that the team cohesion responsible for that success often seems to be its first casualty. Even relatively small organizations can quickly become divided into discrete areas of specialization with little understanding and barely suppressed contempt of each other. The result is a breakdown in clarity of mission, cooperation, and a sense of interdependence.
Apart from extreme internal frustration, the major cost of such separation of functional areas by “silos,” is customer service. The reason is clear: everyone is committed to his or her “vertical” area of responsibility, as if in charge of one of the tall grain silos seen throughout the Midwest. But few people doing the day to day work understand or pay attention to the “horizontal” process, which is the one that the customer experiences.
Consider mortgage lending as an example. An Originations officer takes the application, turns it over to Loan Processing, which after adding its value, turns the paperwork over to Underwriting. From there it may go back and forth to Loan Processing several times for more documentation. If Underwriting approves the loan, it goes to Funding, which must coordinate with an Escrow Company. Upon funding, the loan is sent to Loan Servicing. Loan Servicing itself is divided into further sub-silos: Escrow Accounts, Collections, Foreclosures, Loan Accounting, Customer Service (i.e., complaint department), etc. Pity the poor home buyer or realtor who tries to navigate this maze to get an update on what is really happening. A mistake or snag anywhere along the line can—and often does—create a nightmare for the borrower, from applications that take forever to get approved, all the way to the first communication from Loan Servicing arriving in the form of a foreclosure notice!
How do some companies overcome these hurdles and gain a reputation for outstanding service?
- They make sure everyone from top to bottom understands the business model. This means more than providing a flow chart of how transactions occur and are completed, though this would be a tremendous start in many companies. A thorough understanding should include an exhaustive inventory of what can go wrong at each step to aggravate and alienate customers and what must happen all along the transaction chain to build repeat business and referrals.
- They provide constant reminders of the organization’s mission, together with frequent feedback from customers on how well you are accomplishing it. Don’t share this feedback only with sales and service and be surprised if accounting, collections, credit, marketing, HR, and product development seem tuned out—they are!
- Companies known for outstanding customer service assign customer accounts to every manager and professional, whatever his or her functional silo. The first consulting firm I joined was Mountain States Employers Council in Denver, which then had some 900 “member companies” or clients. As a consultant in the Management Development Department, I worked with colleagues in Labor Relations, Governmental Regulations, Employee Relations, and Research. Each of us was assigned 15 to 25 client companies, to serve as their personal representative and first point of contact. It was impossible to play this role well without understanding the function of every other department and how they were crucial to client service.
- They make office design and workplace layout a function of organizational development. It amazes me how this is still left up to facilities staff or architects who know little or nothing about how to best organize people around a mission. Physical separation and isolation tend to create psychological insularity as well. There is a reason some software companies have vice president’s desks in the middle of a work area, surrounded by developers’ work stations, rather than in a private office.
- They do regular “Stop, Start, and Continue” exercises among departments, or some variation thereof. Ask, how can we do a better job for you? Or make your job easier? This requires trust and a willingness to admit mistakes, as well as a willingness at times to take “no” for an answer to a request.
- They create cross-functional goals and assignments that require teamwork, and with teams accountable as units. It is amazing how quickly two previously uncooperative managers can support each other when they are assigned a joint objective the successful completion of which will determine their annual bonuses!
- People are sent into the field with specific objectives. Getting people out of the office to visit customers or branch locations is of little benefit if they do not know what to say or do. With specific purposes in mind—to collect feedback, help train or give support in other ways—then informal conversation can take place in a less self-conscious context.
Finally, CEOs in outstanding service organizations set an example by expressing appreciation for all departments and functions, not just their favorites, and we all have them. Common stereotypes are that accountants are bean counters, HR people are bureaucrats, sales people are overpaid fast talkers, engineers are nerds or perfectionists, marketing specialists are dreamers, and OD specialists are shrinks or professors. Sometimes these terms are meant playfully, sometimes resentfully, but they always indicate at least the potential for divisive silos. Accept the differences, learn to laugh at your own limitations, and then make the effort to understand and recognize the other team members, and demand the same of everyone else.
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Copyright, Mulkern Associates, 2007
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