the hidden networks

8/8/2019 The Hidden Networks

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The hidden

workplaceThere's the organization chart - andthen there's the way things really work.Some smart companies are bringingpower structures out of hiding, reportsFortune's Jennifer Reingold and Jia LynnYang.

By Jennifer Reingold and Jia Lynn Yang, Fortune

July 18 2007: 11:00 AM EDT

(Fortune Magazine) -- Anyone who has everworked knows that the org chart, no matterhow meticulously rendered, doesn't comeclose to describing the facts of office life. Allthose lines and boxes don't tell you, forexample, that smokers tend to have the bestinformation, since they bond with peoplefrom every level and department when theyhead outside for a puff. The org chartdoesn't tell you that people go to Janice, along-time middle manager, rather than their

bosses to get projects through. It doesn'ttell you that the Canadian and Japanese salesforces don't interact because the two pointsof contact can't stand each other.

What's your OQ? Take our quiz.

In every company there is a parallel powerstructure that can be just as important asthe one everyone spends stressful daystrying to master. Jon Katzenbach, founding

partner of New York City-based consultingfirm Katzenbach Partners, and his colleague,principal Zia Khan, have spent the pastseveral years trying to bring the shadows tolight. In a study released exclusively toFortune, "The Informal Organization," they

argue that successful managers mustunderstand this "constellation ofcollaborations, relationships, and networks,"particularly in times of stress and transition."We're not saying you can formalize theinformal," says Katzenbach. "We're sayingyou can influence it more than you do."

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In a recent surveyconducted forKatzenbach, a third of the390 respondents - all ofthem working at large U.S. companies - admittedignoring the rules whenthey found a better wayto get things done. Andin companies wheremanagers worked closelywith informal employeenetworks, respondentswere three times morelikely to describe their job

environment as positive.The upshot: Going by thebook is not always theway to get results. Norcan you simply set up abunch of Ping-Pongtables and let peoplegroove to their own beat;supervision andleadership matter.Katzenbach calls the

ability to toggle betweenboth power structures"organizational quotient,"or OQ.

At first blush, much ofthis will sound obvious.But while managers maybe aware of the hiddenworkplace, many areclueless about how to

make it function for them.One of the most effectivetools to navigate thisterritory is social networkanalysis, whichgraphically delineates

relationships between employees, bosses,and units. "You're able to bring data and factand statistics to the table, as opposed torumor, emotion, or anecdote," says TracyCox, director of performance consulting atRaytheon.

Other companies are engaging the shadoworganization without trying to control it.After all, the strength of the thing is mainlyin its squishiness. The examples that followshow how several companies have turned totheir informal power structures to attacksome classic business issues.

PROBLEM: Energizing a sluggish cultureIn 2002, Bell Canada's new CEO, MichaelSabia, inherited a struggling 122-year-oldcompany that needed to banish itsmonopolist mentality in order to compete.

To make his employees more outward-looking, dynamic, and productive, Sabiastarted with traditional business moves,such as implementing a Six Sigma program

and cutting costs. They weren't enough.Culture change can start in the corner office,

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Consultants Zia Khan and Jon Katzenbach(center), with staff at their New York office,believe companies that ignore their hiddennetworks are missing opportunities.

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but it cannot end there: "We needed to get tothe front lines of the organization," saysSabia, "and my view is that it's very hard todo that through formal programs."

Working with Katzenbach, as well as chieftalent officer Leo Houle and Mary AnneElliott, SVP for human resources, Bell Canadadecided to try to cultivate change fromwithin. Using surveys, performance reviews,and recommendations from executives, itscoured its nearly 50,000 employees to find14 low- and mid-level managers whoembodied the mentality the companysought: committed, passionate, and

competitive. Katzenbach and staffers in theHR department interviewed the 14extensively. They found that the subjectsshared the ability to get people to trust themand to solve problems rather than complainabout them. "These people have incredibleinfluence," says Elliott. "It's like the [Lifecereal] commercial - Will Mikey eat it?" Theinitial group then recommended another 40associates.

In September 2004, Bell Canada organizedan all-day meeting in Toronto for these"Pride Builders," including a session withSabia, who bluntly asked them to lead acultural transformation. "When we were brought into this environment," says ValerieBelzile, one of the original 54 and nowassociate director for corporate client carein the wireless unit Bell Mobility, "there wasno more hierarchy. I felt, 'Oh, my God, this isreal."'

The group gradually grew to 150 people,who created their own "community ofpractice" in which they shared ideas. Theyalso worked on problems identified duringcompany-organized gripe sessions and

determined future conference topicsthemselves, such as managing people fromdifferent generations. At one, they handedSabia a list of "pain points" he was unawareof - such as the bureaucracy associated withbringing in new hires. The Pride Buildershelped shorten the process from as much assix weeks to five days.

Ironically, the Pride Builders' success hasmade it a much more formal organization.Today it has morphed into a veritable armyof 2,500 people in 25 local chapters; threefull-time staffers take care of administrativetasks. Belzile is co-coordinator of a chapter

and organizes a monthly lunch to share bestpractices.

Has it made any difference? There are somequantifiable results. Starting in the fall of2005, the company measured the impact of"pride behaviors" on customer and employeesatisfaction in its small and medium-sizedbusiness call centers. Relative to the controlgroup, employee satisfaction rosedramatically, as much as 71 percentage

points. Customer satisfaction jumped too:Percentage increases ranged from 35% to

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245%. "A formal organization is responsiveto the exertion of power," says Sabia, "but aninformal organization is responsive topersuasion. It's changed the way I thinkabout management." Investors' views of thecompany have changed too: At the end ofJune, Bell Canada's parent went private in a$33 billion deal - the largest suchtransaction in Canadian history.

PROBLEM: Grooming leadership

Investment bank Lehman Brothers (Charts,Fortune 500) is a notoriously competitivecompany in a hypercompetitive industry. But

now Lehman is putting more emphasis onOQ in its efforts to identify and retain toptalent. "It has to do with people trusting oneanother and understanding how to bring allthe parts of the firm together for a client,"says Hope Greenfield, Lehman's chief talentofficer.

One resource is the work of Rob Cross, aformer IBM and Andersen Consultingmanager now at the University of Virginia's

McIntire School of Commerce. Cross runsthe Network Roundtable (networkroundtable.org), which studies social network analysis.The roundtable has grown to 80 members intwo years, including Lehman, Merck, Intel,and the U.S. Navy. Its members meetregularly to share data and results.

In 2006 Lehman managers identified 300vice presidents as top performers and sentthem to a four-day leadership workshop.

Then, last April, Lehman brought them toNew York City for the company's first socialnetwork analysis to help the participantsunderstand and improve their existingnetworks. "We're not doing this just becausewe think it will make them happy," says

Greenfield. "We think it will have an impact onboth the firm's and their financial success."

Everyone in the group took a customized15- to 20-minute survey, developed byCross, that asked each person to identifywhom they relied on for information andwhich collaborations led to increasedrevenues. Cross then generated a graphicfor everyone, a web of nodes and networks that allowed each executive to see who isconnected to whom. The analysis assessedthe strength of each person's networkrelative to others in Cross's database. It alsomapped information flows. Several types

emerged, including "connectors," who hadthe most extensive direct ties, and "brokers,"who had the most diverse networks and whowere key to getting things done. Then therewere the "bottlenecks," who - either becausethey were overworked or because theyhoarded information - kept things fromhappening. All the employees were able tosee if they were on the periphery of networksor in the middle of them.

By learning how to interpret the results, theLehman executives picked up the tools to

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build themselves a better network. (Contraryto conventional wisdom, this does notnecessarily mean building a bigger one,Cross cautions; a network that is too big, hehas found, can lose power.) The objective,says Greenfield, was to encourage - but notto force - informal ties between theexecutives. Lehman was intrigued enoughthat it is now considering mappingrelationships with clients.

If the message takes, Lehman believes theexecutives will be more productive, happier,and ultimately more successful. That is notas quantifiable as trading revenue, but then,

that's the point. The event ended with aninspirational speech by the ultimatenetworker - Bill Clinton.

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the hidden networks

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